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When we think about companies that have had incredible rebounds in recent years, many people will remember AMC (NYSE:AMC) shares. The cinema chain has had a great run on the stock market, especially since the start of the pandemic. Over the past year, its share has fluctuated within a fairly wild 52-week range of $7.05 to $91.50. So is another rally coming?
Improving finances
In the third quarter of 2023, AMC reported a notable 45.2% increase in revenue, beating forecasts, and a significant increase in earnings per share to $2.28. This performance could be seen as a significant recovery and suggests possible resilience in the face of adversity.
Despite these positive indicators, the company’s financial health remains a cause for concern. AMC reported its 14th consecutive quarterly loss (albeit smaller than expected). The adjusted net loss for the fourth quarter was 14 cents per share, much better than the market expectation of a loss of 21 cents per share, and actual revenue of $990.9 million beat the forecast figure of $977.6. millions of dollars.
CEO Adam Aron has acknowledged that the global box office may not return to its pre-pandemic levels until 2024 or 2025 at the earliest. However, he remains optimistic about the company’s multi-year recovery, especially with the release of more major films. The company’s earnings forecast supports this idea, with an impressive 45% expected growth next year, well above the industry’s expected expectations of 28%.
The quick effect
Taylor Swift’s release Ages AMC’s on-screen tour has had a considerable effect on the company in the last quarter through continued financial challenges and a competitive landscape. The film broke single-day advance ticket sales records, generating $26 million on the first day of sales alone..
In an unprecedented move for a modern Hollywood release, AMC also acted as the concert film’s distributor. This decision reflects the company’s adaptive strategy to adopt new revenue streams. The financial benefits of this strategy were substantial: the company received a significant 43% of box office revenues.
This move presents enormous opportunities for the company. Many other artists may be looking to capitalize on the success of the Ages tours in theaters. Therefore, AMC may be ahead of the competition by a huge revenue stream.
A mixed perspective
Investor sentiment around AMC is mixed, with some analysts projecting a bleak outlook for the stock. The expected average price for next year is $2.39, indicating a possible 66% decline from its current price. Wall Street analysts have also given the company a consensus rating of “sell” based on its performance over the past three months.
I am buying?
While AMC has shown signs of recovery and resilience, its financial health remains precarious. The stock’s future performance is uncertain, with predictions ranging from a possible rise in value to a sharp decline. Even if another protest is coming, I will stay away from this one.
