AMC Entertainment Group (AMC 3.96%) gained widespread popularity for its part in the meme stock frenzy of 2021. That's when a group of investors got together on social media forums, encouraging each other to buy AMC stock.
The strategy worked to boost the share price by more than 2,000% at one point before it came crashing down as the scheme unraveled. Still, the stock remains popular, and many folks are still holding on in hopes of another surge higher.
More recently, the increased chatter around the company is its rapidly growing revenue. Blockbusters have returned to the big screen, helping AMC bounce back from pandemic-forced shutdowns. Let's see what this could mean for the stock.
Image source: Getty Images.
Top Gun: Maverick brings folks to the movie theaters on Memorial Day weekend
Indeed, revenue in its most recent quarter (ended March 31) exploded to $785.7 million. That was up from $148.3 million in the same quarter last year. Of course, at this same time the previous year, people were more hesitant to leave their homes as vaccinations against COVID-19 were not as widespread. Still, the bounce-back goes a long way to assuage investor concerns that folks would not return to movie theaters after the outbreak.
AMC Revenue (Quarterly YoY Growth) data by YCharts
AMC makes considerable revenue from ticket sales, to be sure, but even more profitable are concession sales. In the quarter ended in March, it earned $252 million on food and beverage sales with a cost of goods sold of just $42.6 million. The highly profitable segment would not thrive unless people return to movie theaters where the company restricts people from bringing snacks inside.
Once on-premise, AMC can sell $9 buckets of popcorn and $6 cups of soda more easily. As the $252 million in sales proves, folks don't mind paying the premium prices partly because enjoying popcorn is synonymous with the movie-going experience. Thankfully for shareholders, blockbuster films are bringing people back to the theaters. Management noted that, buoyed by the much-anticipated release of Top Gun: Maverick over the Memorial Day weekend, more than 5 million guests attended an AMC location, up from 2.6 million on the same weekend in 2021.
Following the blockbuster weekend, CEO Adam Aron exclaimed:
We also want to thank the more than 3.3 million people who have already seen Top Gun: Maverick at our AMC and Odeon theatres in the U.S. and abroad. It was our pleasure to entertain you, and we invite you to come back to our theatres and see Top Gun: Maverick again. This movie is that good! And, lest we forget, expect to be dazzled by the so many more blockbuster movie titles that will be releasing in June, all summer long, and throughout calendar year 2022. Welcome back to the cinema, welcome back to the world of AMC!
AMC is progressing in its recovery
AMC Revenue (Annual) data by YCharts
AMC's revenue cratered to $1.2 billion in 2020, down from $5.5 billion in 2019 due to forced shutdowns at the pandemic's onset. It bounced back to $2.5 billion in 2021, but that was still roughly $3 billion below levels from before the pandemic. Shareholders can undoubtedly be pleased with the company's recovery.
However, it would be prudent for investors to keep it in perspective and compare it to where the business was before the pandemic. Even if revenue doubles again in 2022 from 2021, it would not yet surpass 2019 sales.
