What happened

Shares of movie theater operator AMC Entertainment (AMC -5.41%) rallied a quick 10% at the open of trading on March 11. That comes a day after the company reported earnings, news that was released after the close of trading on March 10. But today's gain needs to be taken with a grain of salt.  

So what

AMC's top line came in at $162.5 million during the fourth quarter of 2020, down from $1.4 billion in the same period of the previous year. That's a huge 89% decline. The adjusted loss for the quarter, meanwhile, was $3.15 per share, down from a profit of $0.35 in the prior year. These are truly dismal results, but, to be fair, they were driven by the coronavirus pandemic and the worldwide efforts to slow its spread. Investors were upbeat, anyway.  

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Image source: Getty Images.

One reason for the positive mood at the start of trading was that AMC Entertainment's loss was a penny less than what analysts had been expecting. And, perhaps more importantly, the company's revenue was roughly $20 million higher than the $142.4 million Wall Street was looking for. Investors tend to like it when companies beat expectations, so a price bump makes some sense on that front. During AMC Entertainment's fourth-quarter 2020 earnings conference call, however, management also noted that it was no longer in survival mode thanks partly to the cash it was able to raise over the past year. That was likely the really exciting news, suggesting that AMC can now focus on turning its business around as vaccines become more widely available.  

Now what

There's no way to candy coat the fourth quarter; AMC Entertainment's business performance was incredibly weak. There were good reasons for that, but there are also implications for the future here. Yes, vaccines will help to get people comfortable That back to the movie theater, but how quickly that happens is still an unanswerable question. Which means conservative long-term investors will probably want to stay cautious with AMC, taking a "show me" attitude, since it could be quarters or even years before the movie business fully recovers -- if it ever does, given the way the pandemic has changed how media is consumed.