Virtually all major players in the entertainment sector had a difficult year on Wall Street in 2022, with growth stalled amid recessionary fears. For studios and streamers, this retrenchment came after a two-year run-up during the pandemic, when at-home entertainment was booming, and content providers were investing heavily in their in-house streaming services.
Initially, investors overlooked short-term losses as the necessary cost to build a strong business for the future. This year, the pendulum has swung back to a focus on profits, with a speculative “growth strategy” falling out of favor. All the big streaming providers – Netflix, Disney, Amazon, and Warner Bros.-Discovery – saw their stock prices plummet over concerns about the huge investments being made with an uncertain future return.
Exhibitor stocks also suffered as the hoped-for recovery in moviegoing stalled due to an inconsistent flow of new studio releases. In September, Cineworld declared bankruptcy in an effort to shed some of its debts and other liabilities that the world’s second-largest exhibitor had accrued during the prior five years. On the bright side, IMAX stock drifted up during the year due to investors showing optimism that the event titles IMAX features on its screens had emerged as the hottest segment in the industry.
However, IMAX’s large exposure in China meant that the “zero COVID” precautions enforced by the Chinese government were limiting revenue from this important market. AMC had a brutal year in the markets, showing the steepest decline among exhibitors, with its share price falling by more than 85%.
AMC had been a big winner in 2021 on the back of an army of retail investors buying up shares under the banner #SaveAMC. Their brief enthusiasm was bright back to earth this year, recognizing that AMC is saddled with extensive debts and an uncertain future that depends on factors outside the company’s control, namely studio releases and shifting consumer attitudes on where and how to watch new movies.
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