AMC Entertainment (NYSE: AMC) has seen its shares soar nearly 100% in the past 12 months after the company attracted strong interest from the retail trading crew centered around Reddit’s now-famous WallStreetBets forum.
Investing in Core Business
AMC Theaters recently announced that it bought seven former Bow Tie Cinemas with a total of 66 screens, said to be the largest movie theater chain in the world. The company acquired an 11-screen cinema location in Saratoga Springs, New York; a 16-screen cinema in Trumbull, Connecticut; a 6-screen multiplex in Norwalk, Connecticut; and an additional location in Norwalk with 8 screens.
AMC has also bought two other former Bow Tie cinema locations in Stamford, Connecticut, and an 11-screen venue in Annapolis, Maryland. The purchase comes after AMC bought theaters in Washington, Chicago, San Diego, and Los Angeles, all of which were reopened or expected to reopen this year.
AMC will encourage Bow Tie moviegoers to sign up for its Stubs loyalty program as the purchase of Bow Tie cinemas puts an end to its former Criterion Club rewards program. The acquired venues will soon offer AMC-branded formats, as well as food and drink products.
“Our theater acquisition strategy makes AMC a better and stronger company as we move forward on our glidepath to recovery,” said Adam Aron, chairman, and CEO of AMC.
Investing in Non-core Business
In a surprising move for many, AMC said last month it bought a major stake in a small gold and silver mining company that has been facing financial challenges.
The chain paid $27.9 million in cash for the miner, called Hycroft Mining Holding, providing it with 23.4 million shares of the company and an equal amount of stock warrants. AMC now holds a 22% stake in the company, under the terms of the deal.
Last November, Hycroft published a quarterly securities filing that showed a “going concern” clause. The miner said it was forced to secure new funding to resolve its financial issues after laying off over half of the workers at its mine in western Nevada and shutting down operations at that location.
Hycroft, formerly known as Allied Nevada Gold, has been grappling with financial issues for years now.
In 2015, the miner filed for bankruptcy protection in a bid to restructure its debt which amounted to $543 million at the time. After successfully going through bankruptcy, the company rebranded to Hycroft Mining.
“Our strategic investment being announced today is the result of our having identified a company in an unrelated industry that appears to be just like AMC of a year ago,” said Aron.
The CEO of AMC identified certain parallels between his company and Hycroft after the theater chain turned into one of the most popular meme stocks in 2021, boosted by a great number of retail investors who massively bought stocks that were shorted by hedge funds.
How Did AMC Perform in Q4?
AMC stock price climbed in early March after the company delivered the “strongest quarterly result in two full years,” it said.
The chain has reported a Q4 adjusted loss per share of -11 cents, compared to the analysts’ expectations of -16 cents per share. Total revenue in the quarter came in at $1.17 billion, just above the analyst consensus of $1.16 billion.
AMC reported a Q4 2021 consolidated attendance of 59.68 million guests, marking an outstanding recovery after reporting 8.09 million guests in the same period a year earlier.
The company reported adjusted EBITDA of nearly $160 million in the quarter and generated more than $220 million in operating cash during the period. It also ended the year with a record-high liquidity position of over $1.8 billion.
“Our positive recovery glide path from the global pandemic continued in earnest in the fourth quarter. While not yet where we want to be, our progress is substantial and unmistakable,” said Aron.
AMC’s strong performance in the fourth quarter was driven by a “robust and appealing film slate” that peaked after the release of the “Spiderman: No way home”, which is now the sixth highest-grossing film of all time.
Last year, the company has forayed into the non-fungible tokens (NFTs) industry after introducing the creation of shareholder NFTs and crypto payment solutions.
In November, AMC announced it has started accepting Bitcoin and Ether for online payments on its website. Furthermore, the company dived deeper into the crypto space last month and announced the addition of Shiba and Dogecoin to its online payment options.
After sustaining devastating blows amid the coronavirus pandemic, the retail investors revived the cinema chain, enabling it to raise billions in additional capital. This has allowed the company to invest in both core and non-core businesses while retail investors continue to offer strong support for AMC stock.
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