The company is taking advantage of its sky-high stock price, launching plans to raise gobs of money that will keep AMC marquees lit for the near future.
AMC announced Thursday that it sold 11.5 million shares, bringing in $587.4 million of new capital. That number shows how much AMC has bounced back over the last few months considering that as of December 30, 2020, the market cap of the entire company was just $347 million.
AMC seemed to acknowledge the bizarre situation by telling investors earlier on Thursday that the “recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business” and admitted that it does not know “how long these dynamics will last.”
The stock offer also came with an unusual warning: “Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment,” the company wrote in a filing on Thursday.
So despite the eye-popping movement on Wall Street, AMC still has a long way to go before it reaches any sort of Hollywood happy ending.
A pandemic hitting an industry in transition
The theater industry was hit particularly hard by the Covid-19 pandemic, and AMC was no exception.
It makes sense that theater chains like AMC struggled over the last year. The pandemic was one of the worst possible things that could have happened to an industry that was already in transition.
The global health crisis caused cineplexes to shut down for months on end, and delayed the release of hit movies such as Marvel’s “Black Widow” and the new James Bond film, “No Time to Die.” Those movies are now set to open this year and audiences are returning to theaters, but that doesn’t mean the problems theaters face have just disappeared.
In fact, streaming, one of the biggest challenges confronting theater operators, got stronger during the pandemic.
If that wasn’t enough, with theaters out of commission, studios took the unprecedented step of releasing big films directly to consumers at home. “Trolls: World Tour,” “Mulan” and Pixar’s “Soul” were all released on digital platforms. Some required an extra fee, and some were available directly to subscribers, free of charge.
A ray of hope
Despite theaters reopening, Hollywood is still moving towards a streaming-focused future. How movie theaters fit into that future is yet to be determined.
But there is hope for the bottom lines of theater chains like AMC, and that hope can be found at the box office rather than just on the Reddit boards.
With vaccinations ramping up, big movies returning to theaters and Covid restrictions loosening, Hollywood studios were hopeful that this summer would help them better understand the overall health of the movie theater industry.
So far, so good.
Sure, it’s only one weekend, but there’s plenty of films this summer that can keep the momentum going. Potential blockbusters including Marvel’s “Black Widow,” Universal’s next Fast & Furious movie, “F9”, and Warner Bros.’ “In The Heights” are on the docket over the next few months. These films come with big buzz that could bring some much-needed foot traffic to theaters.
Whether AMC — and the rest of the industry — stays on offense, only time will tell.
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