What happened
Movie theater chain owner AMC Entertainment Holdings (AMC -0.32%) announced last night that 98% of its U.S. locations will be open for business as of Friday, March 19.
By 10 a.m. EDT Thursday, AMC stock was already up 6% on the news.
Image source: Getty Images.
So what
One week ago, AMC reported its earnings for the year ended Dec. 31, 2020, noting that because of a resurgence of COVID-19 cases nationally, it had retreated from 78% of its U.S.-based theaters open as of Oct. 1, 2020, to just 67% of those theaters open on Dec. 31, 2020 -- and at seating capacities of no more than 40%. Worse, nearly all of the company's international theaters suspended operations for at least some period of time in the fourth quarter, after the company had opened up 90% of them at the beginning of October.
In the first quarter, things got both better and worse. As of March 5, 527 of its 589 domestic locations (90%), and 78 of its 356 international locations (22%) were open. And this trend is continuing.
Now, 98% of U.S. locations will be open by this Friday, including all 25 locations in Los Angeles County and all eight locations in San Diego County, California. And 99% of all locations will be open by next Friday, March 26. These will include 52 of AMC's 54 locations in California (including two brand new locations).
Now what
"It was exactly one year ago that we closed all AMC locations in the United States," AMC CEO Adam Aron said in a statement, which suggests that the company may have decided to rush reopening a bit (or at least rush the press release out the door) to hit this particular calendar date. But even recognizing that, this is powerfully good news for AMC: Essentially all of its U.S. locations will soon be back in business.
Don't expect revenue or profits to rebound so quickly, however. Between "social distancing & automatic seat blocking, mandatory mask wearing ... state and local regulations for seating capacity," and the high cost of disinfecting, vacuuming, and air-filtering its theaters, AMC faces lower revenue than it could historically count upon, and higher costs.
AMC stock may be up today, but the recession that took it down is not over yet.
