Batman may be a superhero, but the movie The Batman wasn't able to save AMC Entertainment's (AMC -3.68%) first quarter. The movie theater chain's top line for the three-month stretch ending in March fell -- a lot -- from the fourth quarter's sales surge stemming from the release of Spider-Man: No Way Home. The setback calls the entire big-screen film industry's post-pandemic rebound into question.
A couple of simple charts put the matter in perspective.
Spider-Man: No Way Home didn't reignite the business
For a short while after Monday's close, the company's stock was soaring. AMC Entertainment topped revenue estimates of $743.4 million for the quarter in question by reporting sales of $785.7 million, up more than 400% year over year. And while still in the red, the loss of $0.52 per share topped estimates for a loss of $0.63 and improved on the year-earlier loss of $1.42 per share. Investors were clearly given something to celebrate.
However, the stock's downtrend, which has been underway since late March, was ultimately renewed on Tuesday to carry AMC shares to their lowest price since May of last year when this meme stock was catapulted higher by a short squeeze. As it turns out, those short-sellers may have understood how slowly any ticket sales recovery would take shape, and how inconsistent that rebound might be. While the release of the blockbuster Spider-Man: No Way Home in the fourth quarter of 2021 made for something of an unfair comparison, major superhero flick The Batman didn't drive the sort of ticket sales seen in the final quarter of last year.
AMC Entertainment sold a total of 39.1 million movie tickets last quarter. That's roughly half the number it was selling per quarter before the COVID-19 pandemic took hold in 2020, and perhaps more notably, is only about two-thirds of the 59.7 million tickets sold during the fourth quarter of 2021. Spider-Man: No Way Home did most of that quarter's heavy lifting.
The slowdown similarly impacted AMC's financial results. While last quarter's revenue of $785.7 million more than quintupled on a year-over-year basis, that's still just half the company's pre-pandemic top line, and down 33% from the fourth quarter's revenue in spite of suggestions the movie business is working its way past the pandemic.
Ignore the impact of streaming at your own peril
Is it just the unfortunate timing of movie releases -- coupled with the fact that COVID-19 is still circulating -- keeping AMC Entertainment Holdings' recovery in check? Maybe.
Film projection outfits like AMC as well as rivals like Cinemark Holdings and Cineworld Group seemingly haven't had as many high-profile films to work with as they'd usually have. Paramount Global has postponed the release of Top Gun sequel Top Gun: Maverick more than once, for instance, so it can be enjoyed by as many people as possible in theaters without the risk of coronavirus infections.
It's not as if theaters have had nothing to work with, however. In addition to Spider-Man: No Way Home and The Batman, recent movie releases include Uncharted, Death on the Nile, and the fifth entry in the rebooted Scream franchise. People simply aren't flocking back to theaters are briskly as hoped. Spider-Man: No Way Home's success arguably reflects less excitement about the actual film and more excitement about doing anything outside of consumers' pandemic routine.
In this vein, it would be naive to ignore the possibility consumers' growing love for streaming at home doesn't have at least something to do with this headwind. The Batman was watchable on HBO Max just 45 days after debuting in theaters. Uncharted was in homes only a couple of months after its theatrical release. And even Spider-Man: No Way Home made its way to the streaming rental and purchase market just four months following its theatrical release. It's a dramatic shortening of the typical waiting periods prior to the pandemic.
It's increasingly looking like the new norm
For a wide swath of consumers who have grown comfortable with -- and accustomed to -- enjoying new releases at home, streaming a movie shortly after its debut may be good enough. Never even mind the large number of originals being produced by the streaming video industry exclusively for their on-demand subscribers. To this end, Morning Consult recently pointed out that 50% of U.S. adults say they're not interested in visiting a theater simply because doing so is too expensive, while 55% of U.S. adults indicate they're more interested in watching movies at home.
So far, the numbers being reported by the film projection industry's top names confirms this new mindset.
This of course makes the upcoming releases of Top Gun: Maverick or the recent release of Doctor Strange in the Multiverse of Madness worth keeping tabs on. If they can't reignite interest in theatrical releases, it's not a stretch to say the business has been permanently damaged by COVID-19.
To this end, know that Dr. Strange's domestic opening weekend ticket sales of $187 million (according to Box Office Mojo) were markedly less than Spider-Man: No Way Home's $260 million, and only slightly better than The Batman's domestic opening weekend of $134 million.
It's not a particularly great sign for AMC.