AMC Entertainment (AMC 9.56%) CEO Adam Aron tweeted out an announcement last week that the long-awaited acceptance of Dogecoin (DOGE -3.87%), Shiba Inu (SHIB 0.50%), and other cryptocurrencies at the movie theater chain was now live through Bitpay, a bitcoin payments provider.
Moviegoers just have to update the AMC app on iOS and Android devices. Then, they will be able to buy tickets with many of the most popular cryptos in circulation, not to mention through other payment options such as Apple Pay and Google Pay, and PayPal.
Image source: Getty Images.
The problem is, this isn't going to drive any movie ticket sales, which is the most important thing AMC needs to have happened to turn its business around. While its legion of so-called "apes," or small retail investors who have steadfastly backed the theater chain for over a year, were supportive and excited by the development, the flaw in the plan is most crypto isn't seen as a means of exchange.
Instead, many view crypto as a way to make a quick buck, and few, if any, will willingly part with their tokens to buy a movie ticket that can just as easily be purchased with cash.
Buying popcorn with Bitcoin
Among many of Aron's ideas, AMC first began accepting crypto last November, including Bitcoin (BTC -0.76%), Ethereum (ETH -0.74%), and Litecoin (LTC 2.95%) Aron made clear that Dogecoin would come soon, and he polled his army of apes to see whether they wanted to trade in SHIB too.
Naturally, they gave a resounding thumbs up to the idea, so it can't be said that Aron isn't responsive to his online followers, many of whom presumably also go to the theater as well as own the stock.
Yet paying for movie tickets with crypto is not a novel move. MovieTickets.com is an online ticketing service AMC created in 2000, but now Fandango owns it. It began offering payment options in crypto back in 2015, mostly for Cineworld's Regal chain (AMC did not participate). It didn't do much, if anything, to halt the slide in theater attendance. In 2015, some 1.32 billion movie tickets were sold, but in 2019 that had fallen 7% to fewer than 1.23 billion tickets.
Image source: Getty Images.
Crypto's retail ruse
Despite cryptos' growing popularity and even ownership, how many people are using crypto to buy things? A growing number of retailers are making it possible to use crypto to pay for an order.
Whole Foods, Home Depot (HD -0.60%)GameStop (GME -0.68%), Starbucks (SBUX 0.93%) and Microsoft (MSFT -0.66%) all accept crypto payments, and a just-released survey by PYMNTS and BitPay suggests over 16 million people have made online purchases with crypto while 7 million have used crypto in-store. That's about 5% of the U.S. population or 7.5% of the adult population.
Yet it also shows that of the 41 million Americans who own crypto, most view it more as an investment or an opportunity to cash in on an increase in value rather than as a medium of exchange. Just as you don't take your gold bullion to the box office to buy a ticket, few will spend crypto on a $15 movie ticket, especially if it could be worth $100 a week later.
Then again, Shiba Inu is down 26% year to date, so maybe buying a ticket might be a way to extract value now before it dissipates altogether.
Cashing in on crypto
While it seems unlikely that many people will part ways with their crypto in exchange for a movie ticket, investors might also want to know what the movie theater stock will do with all the tokens it collects.
Will it hold onto them as an asset on its balance sheet, potentially causing it to take costly writedowns if their value drops? Or perhaps they will immediately turn around and cash them in for dollars -- hardly a friendly move with the crypto world.
Also, the accounting rules for digital assets have not exactly kept up with the times. Audit firm Deloitte notes there are complicated tax consequences (among other issues) depending upon how crypto is held.
Ultimately, accepting payment in a wider variety of cryptocurrencies is nice fan service for AMC Entertainment's retail investors, certainly more understandable than buying a gold and silver mine, and indicates Aron continues to hold to his promises. Yet whether that results in any material improvement in its business seems doubtful.
