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AMC's outlook is extremely dire as pandemic drags on

AMC reported its Q3 earnings on Monday, and the numbers were brutal. Revenue fell 91% from one year ago to $119.5 million, while losses ballooned to $905 million from a loss of $54.8 million one year ago.

Video Transcript

SEANA SMITH: Dan, we had AMC out with earnings yesterday. And taking a look at the numbers– I mean, when take a look, I guess, at the numbers, it’s not too encouraging. Revenue declined by more than 90%. I guess maybe the good news in here was that 90% of its US theaters has reopened. How are you reading this report?

DAN ROBERTS: Yeah, Seana, the numbers were totally ugly. And even though that wasn’t a surprise, it’s still stunning to look through these numbers. Now as you guys mentioned, the stock is up today. That’s really a two-fold phenomenon happening. First of all, as you mentioned, a lot of hay was made of the company disclosing the fact that close to 90% of its US theaters have reopened. You know, that was seen as a big positive.

In addition, the company had a new SEC filing on Monday before it announced earnings, announcing its intention to offer about $50 million worth of new shares. That’s a new way to raise more funding. But look, the picture here is not pretty. And, guys, you know I’m a huge movie theater guy. I take no pleasure in reporting this. But the situation is really dire, and it’s not likely to get any better.

I mean, you guys, people are not exhibiting any evidence that they feel comfortable going to theaters. You know, we had 10 million people, AMC says, have gone to their theaters since March, which, out of context, sounds like a lot. It isn’t. And we know that the pandemic is going to drag on. It’s going to keep people in their homes. It’s going to keep them streaming, not going to theaters.

And I also want to read this part from yesterday’s earnings, OK. I think a lot of people missed this. This is the CEO, Adam Aron, talking about international theaters, because AMC had also said it has reopened 90% of its theaters abroad outside the US. But then he cautioned, “The numbers of open theaters internationally is going the other way. In the past few weeks, and especially the last few days, we’ve been ordered to re close our theaters for most of November in the UK, Ireland, Germany, Italy, and parts of Spain.” Yikes, guys.

Hey, Dan, real quick, why would anybody lend to them? After the pandemic, who’s really going to want to go to a movie theater when you can see smash hits like “Cats” on video on demand right now?

DAN ROBERTS: Well, look, I think, like many industries, the total death of movie theaters has been somewhat exaggerated. AMC is getting hit worse than the others because it’s the biggest. It probably opened too many theaters in the first place. It’s going to have to close a lot of theaters.

But I don’t think that movie theaters are going to go away completely. It’s just like the fact that brick and mortar’s not going to go away completely. I think if you can make the experience better, think Alamo Drafthouse, think places where you can get food and drink at your seat, theaters will stick around. But AMC is going to have to close a ton of these locations.

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