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Expedia expects travel surge, AMC optimistic, DraftKings beats

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Julie Hyman, Brian Sozzi, and Myles Udland discuss some of Friday’s early movers, including AMC dealing with customer hesitancy, Expedia hopeful for travel, and DraftKings winning big from gambling.

Video Transcript

JULIE HYMAN: Well, in addition to the jobs report, of course, we are continuing to watch some earnings news happening. And a number of companies reporting earnings sort of associated with the reopening trade. One of them is AMC. Of course, that company didn't have any earnings as of yet. First quarter loss of about $567 million. However, the shares are trading higher by about 4 and 1/2%.

And it was interesting. Deadline, in its writeup of the conference call, said the CEO Adam Aron was, quote, "nearly giddy" in his conference call in talking about how things are going to be coming back for AMC. They said like an Oscar acceptance speech, he thanked former President Donald Trump for Operation Warp Speed. He cited-- he thanked President Biden as well, I think the CEO of Pfizer.

And he just talked about all the blockbusters that are coming the way of AMC this year that are going to get more people in the seat. So it's interesting, Myles. You know, in this case, we all know that theaters are going to be reopening again. The numbers aren't showing it yet, but investors are still buying it.

MYLES UDLAND: Yeah, and I think, look, if you're the CEO of AMC, you also have to be encouraged by just some of the anecdotal reports that we've discussed around where movie theaters fit into someone's basket of things I will be doing as soon as possible when I'm either comfortable or allowed to after the pandemic. And the moviegoing-- the way that moviegoing had really changed over the last 10 years, I think created-- and I'm sure that AMC would tell you this as well-- created a more loyal and more durable customer.

I think a lot of people-- I look at myself as a casual moviegoer. I mean, I don't really watch the action hero movies, so I don't really go to the movies anymore. But the people who do go to the movies now go more often. And I think that the enthusiasm for that particular movie customer is higher on the other side of this. And you kind of see it through the parks trade, too, right? Look at the enthusiasm to get back into Disney World, to get back in Disneyland. And I think that fits in with this entertainment trade.

And so, for a company that, for a long time, did not know if it would make it to the other side, to see the rules now in place that it can welcome its very loyal customers back into the theaters with studios that cannot wait to get those products, those tentpole blockbuster movies out into the screen, I think sets up for a very exciting time for, again, a company that kind of stared death in the face for a long time.

JULIE HYMAN: Yeah, and then we'll see if they're still staring death in the face in a different way a year from now, right, when we're talking about streaming wars again as the biggest competitor to movies. Another thing that could be coming back, more sports and more sports betting as a result. DraftKings out with its numbers. The company still posting losses, but it was a smaller loss than estimated and revenue up about 250%.

MYLES UDLAND: Yeah, DraftKings really an interesting quarter for the company, now enjoying a full slate here for the first time in a while. And I guess, the NBA is still kind of on an altered schedule. But baseball is back. You've got the golf season with the full schedule, a normal schedule. Football, of course, I found myself betting on the NFL draft because that's just the thing that you do to pass the time. Revenue here coming in $312 million, up, as you mentioned, Julie, more than double from what we saw last year. The adjusted loss per share at $0.36 was narrower than expected.

And something else that it's in a weird-- it's a weird way to look at it because it is a cost for the company, but a way to gauge how bullish DraftKings is on any given cycle is you look at their marketing costs. Their sales and marketing, the S&M line basically quadrupling from the same quarter last year. Certainly you're not going to be spending into a sports shutdown, which is what most of the second quarter ended up being. But $228 million in sales and marketing in the most recent quarter. They saw their average revenue per user up about 50%, $61 against $41.

Again, they're going to have some strange comps here through the rest of the year. But clearly, DraftKings, I think in their mind, still leading and playing out the thesis that the market was so excited about when they came public-- what was that-- a year and a half ago or so. And also, I always like following DraftKings because it's a nice gift to all of us as the initial and probably the most successful SPAC really began this latest craze. And so, for DraftKings's management, we thank you for having brought hundreds of companies to follow in your footsteps over the last year.

BRIAN SOZZI: And shareholders over at Expedia, Myles, are thanking their series of new executives here. Shares are up about 7% here on the pre-market. In many respects, this quarter mirrors what we heard from Booking Holdings CEO Glenn Fogel yesterday. It was a bad quarter, right? Bookings were down 14%. But they hit all the high notes. And those two high notes with any travel stock right now is, is demand coming back?

April for Expedia, bookings were down a little bit better than 20%. In March, they were down 20%. So the trajectory of bookings is improving. And another finer point here with these travel companies, are they still containing costs and finding new ways to cut it? Expedia is still on track to cut about $750 million in fixed cost savings. That is a big, giant, large number that the Street likes to hear this morning.

MYLES UDLAND: Yeah, and we've seen the travel space, again, kind of that AMC story, right? The numbers are going to be bad. The comps are going to be bad. But how they're seeing the future when you saw the chart there for Expedia investors-- have think they've seen the future for Expedia, and they think it is a lot more positive than the past.