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AMC stock declines after Q2 earnings, theater revenue rises above $1 billion

8
Yahoo Finance Video

Yahoo Finance Live anchors discuss AMC earnings and the company's new 'APE' preferred equity issuance.

Video Transcript

BRIAN SOZZI: All right, number three on our list, AMC shares are getting crushed this morning after the company posted a wider than expected loss in the second quarter, announced plans to issue a dividend in the form of what AMC is calling "Ape" preferred shares. So let's start on the quarter here, Julie, because there was a quarter here. There are numbers. So attendance was up--

JULIE HYMAN: I wish I had, like, a little seat belt here on set.

BRIAN SOZZI: Right? Just mind boggling with Adam Aron. But look, let's start on the fundamentals of the business. Attendance up, of course, a lot of that driven by "Top Gun." We saw that out of that Paramount quarter yesterday as well. Sales up pretty good. Operating profits back in vogue for the company. 106 million versus a loss of 158-- of 150 million last year.

That is all pretty good. So the business is coming back. They did warn, Adam Aron, on that conference call last night, that things would slow down this quarter because it's a light release schedule for movies, but could really pick up in the back half of the year. You have the new Dwayne Johnson movie. That is--

JULIE HYMAN: Oh, I know you're seeing that.

BRIAN SOZZI: Oh, I am so psyched. I am psyched to see the Rock do his thing in various movies. So the fourth quarter is looking pretty good. But of course, preferred shares, what an interesting-- another interesting move by Adam Aron, who is really-- I didn't understand him at first. Now that I've spent more time on the weekends really studying his career and him, I get what he's trying to do. I'm getting in his camp a little bit.

JULIE HYMAN: What?

BRIAN SOZZI: I know. It's taken a while. I've been very critical of what he's been doing. But I'm not necessarily--

JULIE HYMAN: Is this like-- speaking of movies, is this "Invasion of the Body Snatchers"? OK, before we get to that--

BRIAN SOZZI: Go, go, go.

JULIE HYMAN: Before we get to that, I just want to make one more note because we had the number of tickets sold up on the screen. And I just wanted to make the point here that there are far below the number of tickets that were sold pre-pandemic, right? And they're still somewhat below the revenue from ticket sales that they had pre-pandemic.

So a lot of what's going on now is what's going on everywhere. The volume is not the same, but the prices have gone up. And AMC has also introduced the sort of dynamic prices, right? That the most popular movies and biggest blockbusters cost more than other movies. So that seems to have been a fairly successful strategy for them. OK--

BRIAN SOZZI: Ape.

JULIE HYMAN: --now let's get back to the man impersonating Brian Sozzi, who's in front of me right now. Listen, this is a share increase disguised as something tasty for shareholders, right? These preferred shares with the ticker symbol, Ape, are convertible into regular equity if the company approves that. Now, the company shareholders already said no to this.

BRIAN SOZZI: Yes.

JULIE HYMAN: Right? They already said they did not want the company to sell more shares. And so this-- I guess if you buy this preferred equity, it's a bet that at some point, the shareholders are going to approve that. But when you sell more shares, the stock goes down. It's a supply and demand issue.

BRIAN SOZZI: Yes, that's what you're seeing here this morning.

JULIE HYMAN: So I don't know. I mean, what--

BRIAN SOZZI: This is-- I think what they announced, this is red meat to that core AMC investor base.

JULIE HYMAN: Well, of course.

BRIAN SOZZI: They're going to love this. They could appreciate these efforts, but the bottom line is this. AMC is likely to come out and raise money from this, maybe go out and buy more independent theaters, maybe go out, make another strange acquisition.

But the reality is the fundamentals of the moviemaking business are back. And maybe that's what investors should be paying more attention to. That fourth quarter slate that Aron talked about on the call last night, that's a really strong slate. And you can see some very big attendance numbers in sales and profits for this company before 2023 even kicks off.

JULIE HYMAN: I'm so confused about what's happening right now.

BRIAN SOZZI: I'm not totally on board, but I'm just saying it's--

JULIE HYMAN: OK.

BRIAN SOZZI: I'm liking a little bit of the fundamental story here. That's it.

JULIE HYMAN: OK, all right.