What happened

Shares of movie theater chain AMC Entertainment Holdings (NYSE:AMC) rose a dramatic 20% in early trading on Nov. 3. That comes after the stock sold off the day before, when it announced plans to sell stock to raise much-needed cash. But the earnings news that led to the advance today wasn't actually very good.

So what

First the good news. AMC reported revenue of roughly $120 million in the third quarter, which handily beat Wall Street expectations of just $84 million. That's a positive, for sure. Another bit of upbeat news from the quarterly update was that the company now has roughly 90% of its U.S. theaters open, with 73% of its international screens up and running. After those positive bits, however, most of the update is pretty grim reading.   

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Image source: Getty Images.

For example, despite the top-line beat, revenue was down about 91% year over year. That's not shocking, given that attendance was off by nearly 93%. That speaks to just how bad the situation is for AMC today. The adjusted loss in the quarter was a huge $5.70 per share, much worse than the same period in 2019, which witnessed a $0.55 loss. Wall Street had been expecting a smaller loss. The balance sheet update was similarly painful, with shareholder equity falling into negative territory (helped along by a roughly $196 million impairment charge) and debt up by $1 billion year over year. As for the business environment, AMC noted that there's no clear sign that things will improve anytime soon.  

Now what

Although investors seemed to be quite excited by the earnings report, it is clearly not good news. At best it is less bad than anticipated, which isn't really all that positive given the still troubled outlook for AMC and the movie theater industry. Conservative long-term investors should probably stay on the sidelines here. About the only thing that's pretty certain from here is continued price volatility. Notably, by around 10 a.m. EST the gain had been pared to 13% -- still material, but well off the earlier highs.

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