Home Entertainment Why AMC Entertainment Stock Dropped 5% Today | The Motley Fool

Why AMC Entertainment Stock Dropped 5% Today | The Motley Fool

0
Why AMC Entertainment Stock Dropped 5% Today | The Motley Fool

[ad_1]

What happened

Shares of movie meister AMC Entertainment (NYSE:AMC) lost 5.2% in Thursday trading and continued to fall in the after-hours. There’s been no “new” news today to explain the decline, so I can only presume that it took investors a while to work out the math on yesterday’s press release.

So what

So what did AMC say yesterday, and why might it be dragging the shares down today?

In an upbeat press release, AMC boasted that it has just crossed “the 1,000,000 attendance mark” for moviegoers returning to its theaters “since reopening on August 20.” But here’s the thing:  

At last report, AMC had about 70% of its U.S. theaters (roughly 420 locales) up and running again after their long Covid-19-caused hiatus. It’s been three weeks since those theaters started reopening and, while not all of those theaters were open for the entire three weeks, here’s how the math would work out if they had been open:  

One million divided by 21 days divided by 420 theaters equals…about 113 paying customers per theater per day.

Darkened, empty movie theater with floor littered with popcorn.

Image source: Getty Images.

Now what

Mind you, that’s not 113 souls sitting in front of a single screen watching a single movie, once. That’s 113 customers for the entire day, spread across all the screens housed at a single location. And that’s…not a lot of business AMC is bringing in.

It means that even the 25% to 40% maximum capacity that AMC is currently permitting in its theaters isn’t getting close to maxed out. Even granting that AMC has extensive operations overseas (where another 3 million customers have viewed films over the past three weeks), it appears AMC is pulling far less traffic than it needs to, to return to profitability — and that’s why AMC stock is down today.



[ad_2]

Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here