What happened
Shares of AMC Entertainment Holdings (AMC 2.31%) fell 7% on Tuesday, following the release of the movie theater company's first-quarter earnings release.
So what
AMC's revenue plunged 21.6% to $941.5 million, as coronavirus-related social distancing guidelines drove it to close all of its theaters on March 17. With little revenue coming in after that time, AMC posted an adjusted net loss of $231.6 million. AMC also recorded a $1.85 billion impairment charge, as it marked down the value of many of its theaters.
AMC Entertainment stock fell after its empty theaters generated large losses. Image source: Getty Images.
To stem the bleeding, AMC furloughed all of its U.S. employees and most of its global workforce. It also raised $500 million in cash from debt issuance, and it's attempting to negotiate rent deferrals with its landlords.
"We are confident we are taking the necessary steps on a broad array of fronts to ensure AMC's future success as we navigate these turbulent and uncertain times," CEO Adam Aron said in a press release.
Now what
AMC is in a dangerous position while its theaters remain closed. And even when they reopen, it's uncertain if enough people will head back to movie theaters during the pandemic. Until a vaccine or effective treatment for COVID-19 is found, many people may instead choose to watch movies in the safety of their own homes. That could be a big problem for AMC -- and its shareholders.
