It's not every day you see a stock soar after it cut its dividend 85%, but investors cheered theater operator AMC Entertainment Holdings (NYSE:AMC) slashing its dividend to $0.03 per share from $0.20 per share. That's because it also decided to initiate a $200 million share-repurchase program.

The movie chain jumped at the opening because it also reported fourth-quarter earnings results that handily beat expectations. AMC said it generated $0.35 per share in earnings in the quarter compared to Wall Street's estimates of just $0.08 per share.

Moviegoers eating popcorn

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When stock is worth more than its dividend

AMC has seen its stock tumble 56% over the past year as it and peers like Cinemark Holdings and Cineworld's Regal Cinemas chain have struggled against streaming video and a lackluster box office take from Hollywood.

Yet AMC reported a strong fourth quarter as it notched record food and beverage sales per patron in the U.S. and internationally. It also said its movie ticket subscription service, A-List Stubs, has over 900,000 members, and it believes the program is profitable. 

The subscription service was launched in response to MoviePass, which had debuted an unlimited movie ticket program for just $10 per month. Not surprisingly, MoviePass went bankrupt last month.

Although AMC slashed its dividend payment, it said it actually could afford to pay it, but because its stock has plummeted over the past year, it was better to return value to shareholders in the form of stock buybacks over the next three years. Senior executives also agreed to take a 15% pay cut in salaries and bonuses in exchange for AMC stock.