Movie theater chain AMC Entertainment's (AMC 9.49%) preliminary fourth-quarter results posted on Feb. 1 were better than expected, briefly sending the stock higher as a result. And that makes sense -- the market was pricing in numbers that were more pessimistic than merited. Shares responded to the newer, better information.

Before betting on the latest news as the beginning of a prolonged recovery from a major sell-off, however, hold off on that trade for just a few moments and take a deeper dive into the matter. A more holistic view leaves plenty of room for more downside.

A chalk drawing of a trend line moving up, and then plateauing under a red bar.

Image source: Getty Images.

AMC is on the mend, mostly

As great as last quarter's results look like they're going to be relative to estimates, they're still not back to pre-pandemic levels. And, perhaps worse, they've deteriorated since the end of the quarter in question.

AMC expects to report $1.17 billion of revenue when it posts its fourth-quarter figures, versus a year-ago, COVID-19-crimped comparison of $162.5 million. Analysts were collectively modeling a top line of just under $1.1 billion. As for the bottom line, the theater chain believes it will lose between $114.8 million and $194.8 million in the fourth quarter when including a non-cash impairment charge of $50 million to $125 million. That's a marked improvement on the $946.1 million loss suffered in the final quarter of 2020, even after stripping out that quarter's $466.1 million writedown. Analysts, however, were still anticipating a loss of only $134 million -- at the smaller end of AMC's guidance.

Nevertheless, the market initially saw the company's preliminary fourth-quarter numbers in a bullish light, recognizing profitability projections mean little in the current environment.

And overall, that's a reasonable response to AMC Entertainment's guidance. It does demonstrate forward progress following 2020's pandemic-driven implosion, and the smashing success of Spider-Man: No Way Home released in December underscores the idea the movie business is bouncing back.

Before plowing into AMC shares though, there are a couple of charts you'll want to see.

Don't get too excited just yet

The chart below is the company's historical results and analysts' outlooks through 2023. The fourth quarter's top-line guidance of nearly $1.2 billion is better on a year-over-year basis but still below the $1.4 billion typically recorded in the final quarters of the years prior to the pandemic. It's also worth noting that fourth quarters are usually profitable ones for AMC, on the basis of operating income and earnings before interest, taxes, depreciation, and amortization (EBITDA). Last quarter, the theater chain remained deep in the red.

AMC Entertainment will remain in the red at least through the end of 2023, according to analysts.

Data source: Thomson Reuters. Chart by author.

The progress is commendable, to be fair. There's a long way to go, though, before the company achieves a full recovery. In fact, AMC is expected to remain unprofitable until the tail end of 2023. The recovery may be even further down the road than suggested by analysts' estimates, too, in light of recent information.

Yes, last quarter appears to be a big step in the right direction even if one single film was responsible for the lion's share of box office sales -- it's not unusual for blockbusters to drive results for this industry. What is unusual is just how quickly the success of Spider-Man: No Way Home came and went with no real follow-through.

In January, movie ticket sales in the United States essentially fell back to the same depressed levels seen the same time last year when lockdowns were easing, but consumers were still hesitant to go out. Without major titles to attract audiences, people weren't interested in visiting a theater.

Domestic movie ticket sales have cratered in January, following a sales surge linked to Spiderman: No Way Home.

Data source: Box Office Mojo. Chart by author.

In the absence of any new, must-see films playing in theaters right now, the film industry is starting 2022 on the wrong foot.

It's a conundrum for the entire movie business. Studios are hesitant to release their highest-potential films to theaters that may not see full auditoriums. Theaters, however, need those blockbuster flicks to remain afloat. Spider-Man: No Way Home likely benefited from the fact people were willing to go to the movies after nearly two years of COVID-19 restrictions. They were starved for the big-screen experience, but that demand was short-lived.

Little upside left from here

Make no mistake. AMC Entertainment is in better shape now than it was a year ago, and it should be in even better shape a year from now. The COVID-19 pandemic is still with us, but the world is adapting with the rollout of vaccines.

Given the fact this movie theater chain was barely profitable even before the pandemic, any lasting damage done the film industry during the pandemic -- including the success of streaming releases of major titles -- may be enough of a headwind to keep AMC in the red through 2023, or even well beyond then.

With the stock still trading at a market capitalization far higher than what it enjoyed in "normal" conditions in 2018 and 2019, there's seemingly little upside left for investors hoping to cash in on AMC's uncertain recovery.