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AMC to accept bitcoin as payment, says CEO

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Shares of AMC Entertainment traded higher on Tuesday morning following better-than-expected Q2 results. While revenue topped estimates and losses were narrower-than-expected, one of the biggest headlines from the company’s earnings call was that it would be accepting Bitcoin as payment for movie tickets and concessions if purchased online at all U.S. theaters by year’s end.

Video Transcript

MYLES UDLAND: AMC out with its results last night. Stock is up 10% following that quarter. A lot to go on here. Some goofy stuff happening on the conference call. And some actual numbers that are maybe a little bit less encouraging. Brian Sozzi has some of the good and the bad on that one. And the crypto caveat-- why some argue that provisions in the infrastructure bill related to cryptocurrency could stifle innovation in the space for years to come and how it may impact privacy going forward. We'll talk about those issues coming up in just a bit.

But let's begin our conversation this morning with AMC. Company, as we mentioned, out last night with its latest quarterly results. We continue to see the company under quite a bit of pressure with the movie theater recovery measured, let's say, to say the least. But a 9% rally here for the stock. And let's start here, I guess, Julie-- with the commentary from the earnings call, which I think has everyone most excited. CEO Adam Aron talking about the company working on its ability to accept Bitcoin sometime later this year. And really beginning the proceedings with a very movie-like story, let us say, about the saga that has been AMC, all of which is a way to sort of move past the actual results, which show a business still in an extremely challenged industry, as anybody with eyes can see.

JULIE HYMAN: Yeah, although I guess the loss was a little bit smaller than had been anticipated. But, I mean, Adam Aron alone, among the CEOs that have been targeted as meme stocks, has leaned into its meme-ness far and away more than anyone else. We already knew this. And he continues to do that further, with saying the company is going to accept Bitcoin at its theaters.

By the way, they're going to accept Apple Pay and Google Pay too. But of course, nobody is talking about that, because it's not really about accepting Bitcoin, is it? It's about being a meme. It's about being buzzy. It's about capturing the zeitgeist. And so he continues to do all of that.

We should also say the company's cash position, which was nil at the end of last year-- it's now saying it has $10.4 billion in long-term debt and leases. And that seems to be something on the fundamental side that some analysts are pointing to that the liquidity position is better and that even though things are still not great for the movie business, at least they have some resources here that they did not have before they became a meme stock, you guys.

BRIAN SOZZI: Yeah. Let me rifle through a bunch of stuff here. And there is a lot to, as the analyst community would say, unpack. So Adam Aron on his earnings call last night saying, quote, "we are crushing it." So let me show to you guys what crushing it looks like for AMC and CEO Adam Aron. Free cash flow, negative, 251.71 million attendance. Overall attendance-- 22 million human beings visited AMC theaters in the US and internationally. That is down, compared to 96 million people attending theaters in the second quarter of 2019. Adam Aron didn't put that comparison in there. I actually went back to the filings and did it myself, because every other company in corporate America is giving those 2019 comparisons except Adam Aron.

And the conference call was really like one I have never heard before in my career-- getting asked if there is going to be an AMC mascot. There won't be any. Being asked if drive-in movie theaters are coming back. They won't be, because drive-in movie theaters really don't make any economic sense at all.

Also-- and I do have to give Adam Aron a hat tip on this one-- explaining to his retail investors on the call what a 10b5-1 plan is-- essentially a stock trading plan for corporate executives. He did hint, as part of this plan, he will start to sell some shares in September, highlighting he is 67 years old. Most of his wealth is tied up into AMC shares. And he might look to sell some shares. But he didn't want to alarm investors, so he broke down that 10b5-1 trading plan.

But overall, guys, this was not a good quarter. And the outlook remains very much unclear for this company. Burning through lots of cash. I know they touted they have $2 billion in liquidity-- the most in 100 years, Aaron said. But still, they're burning money. They're burning cash. And the outlook, again, is very, very uncertain.

JULIE HYMAN: But the tweets get a lot of engagement, so--

MYLES UDLAND: Which he mentioned.

JULIE HYMAN: So everything's OK. Yeah, exactly.

MYLES UDLAND: He mentioned on the call how much he's enjoying tweeting.

BRIAN SOZZI: He's getting a lot of tweets. They're also using the movie theaters, he said, for UFC events. Also coming up this month, they will be holding concerts or showing movie concerts-- or concerts inside the movie theaters from Chance the Rapper and Halsey, really trying to get people back into the movie theaters. But again, you had 22 million people come to your theaters in the most recent quarter. You had 96 million people come in the second quarter of 2019. That is a large gap.

And the only thing that has happened between now and then-- the COVID variant continues to spread across the country. And you have millions and millions of more people streaming content. And it really is unclear when you get those 75 million people back into your theaters.

MYLES UDLAND: And speaking of 2019 levels, relative to that-- so second quarter admission revenues-- and sorry I'm looking to the left, reading off this bigger screen here-- in the second quarter, admission revenues 18% of 2019 levels. Now, that was better than 2% of 2019 levels they saw in the first quarter. And so far in the third quarter, they're running at 57% of 2019 levels. So, you know, not a bad trajectory there. Also boasting 44.1% increase in food and beverage revenue per patron relative to 2019.

And we've talked a lot in this program about costs going up, inflation, what consumers can tolerate. And in the one question that AMC was asked by a Wall Street analyst and not a retail shareholder who had written in beforehand, they were asked about the ticket on the food and beverage part of the business, which tends to be higher margin than the overall movie, because you got to pay for the movie, which is more expensive than popcorn, even on a gross basis or on a net basis. And so asking-- Chad Beynon, our friend at Macqueri, asking about the tolerance for consumers there to accept those higher prices. And he said that those have pretty much breezed through without any issue.

On the one hand, I think you have a much stronger consumer environment in which that would be the case. On the other hand, right now-- you know, and I'm reminded of our conversation, Julie, with Chad yesterday about how he hasn't been back to the movie theater. Only the hardest of the hardcore moviegoers are going right now. And they are thrilled to buy popcorn and buy soda. And they're ready to get all of the accoutrements that goes with going to the movies.

But when you get back to attendance levels that are 100%, are you able to pass through that kind of price increase? Are you going to have that kind of increase in growth on the ancillary spend that you were enjoying before? But this is all sort of-- you know, Sozzi, this is all sort of in-the-weeds analyst stuff. And it doesn't really seem like the point of the story we're at.

BRIAN SOZZI: Well, let's also stay in the weeds here too, because Julie referenced this at the top. AMC noting they have $420 million in deferred rent obligations. At some point, they're going to have to pay that rent. It's unclear if landlords will cut it in half. Whatever it is, they're going to have to pay that money out. And when they do, that $2 billion in total liquidity will look a lot different.

Now, Aron also saying on the call he sees a, quote, "happy Hollywood ending to this story," end quote. So there you see Adam Aron there in likely better times, smiling, feeling pretty good about himself. But is there really a happy Hollywood ending here? Again, I just come back to it's unclear, just given the dynamics in the marketplace with COVID and how people are fundamentally just ingesting media very, very differently compared to pre-pandemic.

JULIE HYMAN: Well, right now, given what you're outlining, it looks about as unrealistic as most Hollywood movies that they would have a Hollywood ending, magically so. But, you know, I guess anything's possible.

MYLES UDLAND: And lest we get out of this conversation without mentioning it, David-- don't know who David is-- David asked if AMC will consider partnering with GameStop for more experiences via local and national gaming competitions.

[LAUGHING]

BRIAN SOZZI: Myles, what's-- if you--

MYLES UDLAND: The company said-- hold on. Hold on.

BRIAN SOZZI: --had to pick a mascot for AMC, what's the AMC mascot?

JULIE HYMAN: Wait. Yeah, what did he say? What did he say?

MYLES UDLAND: Hold on. The company said-- or Adam Aron says, I don't even think I can count the number of times people have asked me if we could partner with GameStop. We're certainly willing to do so. It seems to me it's one of these interesting ideas that flowed in from our individual investors. Happy to reach out to GameStop and see if they have any interest. So-- sure.

BRIAN SOZZI: Sure.

MYLES UDLAND: Sozzi, do you take the call if you're GameStop?

BRIAN SOZZI: Uh, no. Where is the partnership? I don't understand how a tie-up would work. I think it would be easier for AMC to come out and make its mascot a big ape or a giant bag of popcorn. That seems more impactful to me. You take a picture in front of an AMC ape inside their theater, that thing's going viral. That's some great marketing right there.

MYLES UDLAND: And you know they were also asked that question as well.

BRIAN SOZZI: Mm-hmm.

MYLES UDLAND: You're leading the witness. Someone asked if they would consider making a gorilla their mascot. They said no plans at this time. So that's the status of AMC. Feels like if they do this every quarter, we're not going to be as excited about it. So we can enjoy this second quarter. Very fun, novel call. I think maybe third or fourth time through the order here, we're not going to be as fired up to talk about it. So we'll save this one for the memory book and then we'll move on with our lives.