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Why AMC Entertainment Stock Had Another Grand 10% Reopening This Morning

By Rich Smith – Aug 27, 2020 at 9:54AM

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One week into its reopening, things are progressing nicely.

What happened

Two weeks ago, movie theater operator AMC Entertainment Holdings (AMC 9.08%) announced plans to reopen "more than 100" theaters on Aug. 20. Last night, the company confirmed that this grand reopening is under way -- and an additional 170 theaters will reopen today.  

AMC stockholders cheered, and by 10 a.m. EDT the stock was already up 9.8%.

Father and son enjoying a movie

Image source: Getty Images.

So what

It's been a long wait for AMC, which closed theaters across the country in response to government-ordered stay-at-home mandates designed to control the spread of COVID-19. Initially, the company anticipated closures would last only six to 12 weeks, but as it turned out, this has been a five-month hiatus for AMC.

Now what

In its announcement, AMC described its first weekend of renewed operations at 100 theaters as "successful" -- although the company did not give any specifics on the number of moviegoers who've come back to the theater, or how much they're spending. Still, in a recession, any revenue is probably preferable to no revenue, and to maximize the return on its "millions" it's spent setting up "high tech solutions to sanitization and disinfection including electrostatic sprayers, HEPA vacuums and MERV 13 air filters" in its theaters, AMC will reopen 170 more locations today, which the company says will bring its total open theaters to 300.

By September, 400 theaters, about two-thirds of AMC's roughly 600 U.S. theaters, should be up and running.

As for when these theaters will be profitable again -- that's anyone's guess.

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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