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Here's Why AMC Entertainment Stock Rose Today

By Howard Smith - May 7, 2021 at 11:10AM

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The CEO was optimistic with several reasons for the company to believe the future looks bright.

What happened

AMC Entertainment (AMC -4.01%) reported first-quarter 2021 financial results Thursday night, and investors liked what they heard. As of 10:30 a.m. EDT Friday, shares were 7.8% above yesterday's closing price.

So what

The company said 99% of its domestic theaters are open with limited seating capacity, but only about 27% of its international sites are currently open. Though one comment from CEO Adam Aron is likely what has investors most optimistic. In the earnings conference call, Aron said the leading theater operator has gained an advantage from the crisis. Aron said that "our market share in the United States has soared, increasing by about 25% compared to prepandemic levels."

Masked moviegoers leaving a theater concession stand with their purchases

Image source: Getty Images.

Now what

Aron said the company now has about one-third of the U.S. market, adding in a statement, "We finally can now say that we are looking at an increasingly favorable environment for movie-going and for AMC as a company over the coming few months."

For now, the business is still struggling to recover. Revenue in the first quarter was down 84% compared with first-quarter 2020, prior to the start of most of the pandemic impacts. AMC is not yet back to profitability, but the company has raised a lot of capital to navigate through the balance of the crisis. 

With enough cash on hand, news that it has gained market share during the downturn, and an environment where consumers are going back out, investors may be ready to believe there will be a long-term positive outcome for AMC. 

Howard 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
AMC Entertainment Holdings, Inc.
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