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AMC's 25% Plunge, Explained

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AMC's 25% Plunge, Explained
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AMC Entertainment Holdings Inc (NYSE: AMC), the largest movie exhibition company in the U.S., shocked investors on Tuesday with a poor outlook. The company said that it expects to lose $1.34 to $1.36 per share (after earning $0.24 per share last year) in the second quarter on revenue of $1.2 billion to $1.204 billion versus Wall Street's expectations for $1.26 billion.

AMC also expects to report a net loss for the second quarter between $178.5 million and $174.5 million compared to net earnings of $24.0 million in the same quarter a year ago. However, included in the net loss this quarter is a $202.6 million impairment charge related to the company's National CineMedia investment.

For the full fiscal year, the company now expects to lose $0.97 to $1.17 per share on revenue of $5.1 billion to $5.23 billion. Both of these metrics are short of the $0.58 per share and $5.28 billion analysts were expecting.

AMC Plunges 25%

Investors were clearly disappointed with the preannouncement as AMC's stock tumbled 25 percent Tuesday afternoon and carried over into Wednesday's pre-market session.

AMC cited poor industry box office trends in its warning. Specifically, the North American industry box office for the second quarter fell 3.3 percent while the U.S. industry box office declined 4.4 percent. On the other hand, European box office trends grew by a double-digit percentage year over year but weren't notable enough to provide a big benefit because the second quarter is the smallest quarter of the year.

Looking forward AMC thinks that a series of cost-saving and promotional activities such as strategic pricing will help it push through the difficult environment.

AMC will report its complete financial results on Aug. 7, after the market closes.

At last check in Wednesday's pre-market session, shares were down 23.32 percent at $15.95.

Related Links:

Why Dalian Wanda, National CineMedia Led Barclays To Downgrade AMC Entertainment

Movie Theater Stocks Tumble Following Bearish Comments From A Credit Suisse Analyst
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Image Credit: By Mark Goebel from Taos, New Mexico, USA - iy6752.JPG, CC BY 2.0, via Wikimedia Commons

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