Shares of AMC Entertainment Holdings (AMC -1.54%), one of the largest movie theater operators in North America, fell nearly 11% in early trading on Nov. 9. An hour or so into the trading day the stock was still down by roughly 9%. The big news out of the company was third-quarter 2021 earnings, which it reported after the market closed on Nov. 8.
Trading in AMC Entertainment's stock has been caught up in the meme stock craze, so it often moves, sometimes dramatically, for no discernible reason. However, today's move had a reason. The movie theater operator reported third-quarter 2021 revenue of $763 million, up from a scant $120 million in the same quarter of 2020. Roughly 40 million moviegoers visited the company's theaters globally in the quarter, up from just 6.5 million last year. The adjusted quarterly loss declined from $5.70 per share in the third quarter of 2020 to a loss of just $0.44 this year. These are massive improvements, largely thanks to economic reopenings following the coronavirus-related economic shutdowns in 2020. Which brings up the problem with the numbers.
Essentially, business is not back to pre-pandemic normal yet and, it seems, investors aren't pleased with the rate of progress, given the stock drop today. To provide a view of where AMC Entertainment is today requires looking back to the third quarter of 2019. In that quarter revenue was a touch over $1.3 billion as it served 87.1 million customers in its theaters. Roughly speaking, despite having substantially all of its theaters open, the movie chain is only about halfway back to its pre-pandemic level. That said, the company lost $0.55 per share in the third quarter of 2019, so the bottom line appeared better this year than it was before the pandemic. However the math isn't that easy because the share count increased materially between the two periods. The absolute loss in the third quarter of 2021 of $224 million was notably higher than the absolute loss in the same quarter of 2019 of just under $55 million, the current quarter's red ink just got spread over more shares.
AMC Entertainment is not a stock that most investors should be looking at today. Yes, its business is improving, but there's still a long way to go before business is back to normal. And, given the heavy debt load the company is carrying on its balance sheet, there's still a great deal of financial risk here if the company continues to bleed red ink. Add in the meme stock issue and this is a speculative turnaround play, at best.