AMC turns lower in wake of box-office beat (updated)

May 10, 2022 11:04 AM ETAMC Entertainment Holdings, Inc. (AMC)By: Jason Aycock, SA News Editor21 Comments

Low angle view of the exterior of an AMC movie theater on a sunny day.

Colleen Michaels/iStock Editorial via Getty Images

Updated: AMC Entertainment (NYSE:AMC), up as much as 12% in the first few minutes of trading Tuesday, has reversed course and is 4.3% lower as of 11:03 a.m., after the company's strong earnings Monday gave investors hope that a post-pandemic turnaround was under way for movie theaters.

Volume after 90 minutes of trading has surpassed half the stock's typical full-day average.

Revenues quintupled, unsurprisingly, from a prior-year period when theaters faced COVID-19 closures.

The theater operator also cut losses heavily, though, and boosted EBITDA by almost 80%. That came in a quarter that benefited from some of the biggest film hits in two years, including Spider-Man: No Way Home, The Batman, and the new hit Doctor Strange in the Multiverse of Madness.

One of the leading lights of the meme stock phenomenon, AMC was naturally the talk of forums like StockTwits (where it rose the most in discussions) and on Reddit's WallStreetBets forum, where mentions jumped 83% to make AMC one of the top stocks discussed.

Leading up to the earnings, the company had seen two of its bonds fall the most in high-yield secondary trading Monday amid expectations that the report would turn out more negatively.

Wedbush was relatively unimpressed, maintaining its Underperform rating and cutting its price target further - to $4 from $5, implying 69% downside from a current $12.96 quote.

On the company's earnings call, CEO Adam Aron touted AMC's recovery trajectory and suggested it was going on offense, planning more strategic investments and moves into home popcorn, credit cards, NFTs and crypto.

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