AMC Entertainment had a no-good-very-bad year on Wall Street in 2022, with its stock price declining more than 80% from its high at the beginning of the year. Unlike Netflix, the decline was not due directly to business performance, which improved considerably throughout the year. The company’s box office revenues more than doubled in 2022 compared with the pandemic doldrums of 2021.
AMC’s challenge was a hangover effect from the stunning rise in the company’s share price driven by retail investors who stepped in to support the company during the early days of the pandemic. When AMC’s “reddit rally” began in January 2021, its shares were trading for less than $2 per share, and the company was teetering on the edge of bankruptcy. What began as a trending “joke” – see #SaveAMC – became a real “thing,” with shares shooting up to as much as $70/share.
Eventually, the sugar high of sentimental movie lovers wore off, and the reality of a long-term revenue decline coupled with a massive debt load from pre-pandemic acquisitions took its toll. AMC was wise to squirrel away some of its new-found resources to fund new ventures, up to a recent rumor that it was negotiating with its bankrupt competitor Cineworld to take over a significant number of its Regal Cinemas locations. With the low trading price of its shares, AMC may no longer have the resources necessary to complete the deal.
AMC’s execs are now floating the possibility of a “reverse stock split,” hoping it would increase the total value of all outstanding shares. Wall Street was very negative about the prospect of this maneuver, driving down AMC shares by an additional 20% at the end of a difficult year.
See also: AMC Held Talks About Acquiring Theaters From Bankrupt Cineworld (Wall Street Journal)