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Why AMC Entertainment Stock Had a Grand 10% Opening This Morning

By Rich Smith – Aug 13, 2020 at 11:36AM

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Three weeks from now, two-thirds of AMC's theaters should be back in business.

What happened

Shares of movie theater operator AMC Entertainment (AMC -1.83%) jumped in early-morning trading Thursday, after the chain announced the grand reopening of more than 100 of its theaters scheduled for Aug. 20 -- with hundreds more set to reopen in the following weeks.

By 10:35 a.m. EDT, AMC stock had already gained 10.3%.

A woman and man watch a movie and eat popcorn in a movie theater.

Image source: Getty Images.

So what

Is the gain justified? Let's check the details. As AMC advised, theater operations will resume "at more than 100 U.S. locations on Thursday, August 20." Approximately 300 more of AMC's theaters will reopen "during the following two weeks."  

So by the time Warner Bros.' highly anticipated Tenet film hits theaters on Sept. 3, roughly two-thirds of the company's more than 600 U.S. theaters should be open to show it.

Now what

Now the question is whether movie fans will return to the theaters to see it and spend their discretionary dollars at AMC. (Because, without customers, it won't matter how many theaters reopen -- AMC will remain revenue-less).

In an attempt to revive enthusiasm for the in-theater moviegoing experience, therefore, AMC will be promoting the reopening of its first wave of 100 theaters on Aug. 20 by offering a one-day, $0.15-per-ticket promotion. (That's a nod to the first price the theater chain charged when its business started up back in 1920).

In subsequent days, leading up to the arrival of new releases Tenet and Disney's The New Mutants (arriving Aug. 28), AMC will offer up a slate of recent successes such as Black Panther, The Empire Strikes Back, and Ghostbusters (the good one), charging $5 for admission and $5 concession prices on Coke, popcorn, and other treats.

Investors, meanwhile, will be hoping that in time those $5 prices will add up to meaningful revenue for AMC again.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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AMC Entertainment Holdings, Inc. Stock Quote
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