What happened

Shares of movie theater chain AMC Entertainment (AMC -5.41%) stock fell 50% in the first half of 2022, according to data provided by S&P Global Market Intelligence. The stock is still declining from the meme-stock status which initially propelled its price upward, along with a slow recovery from pandemic closures.

So what

At the beginning of the pandemic, with its doors shuttered and business at a complete halt, it wasn't clear whether or not AMC would make it through to the other side. It raised tons of cash and tried some interesting ideas, such as private screenings, and then got a boost from retail investors who banded together to create a short squeeze. AMC stock gained 400% in about a month last year as these investors pushed the stock higher, but as interest fell, and doors began to reopen, the price has been falling.

The return to theaters has been going very well, and AMC is trekking back up. In the 2022 first quarter, revenues were $786 million, a huge leap from $148 million last year. Net loss improved from $567 last year to $337 this year. While that's still below pre-pandemic numbers, it's a significant rebound.

AMC Revenue (Quarterly) Chart

AMC Revenue (Quarterly) data by YCharts

Since that report was released in May, there have been even more events in AMC's favor. Top Gun: Maverick, released May 27, has been the highest-grossing film in 2022 with $127 million in domestic opening-weekend ticket sales. Three other films grossed more than $100 million in ticket sales in their opening weekends. Ticket sales from the weekend of June 9th beat the same weekend in 2019.

Not only does AMC benefit from ticket sales, but it makes even more money, and sees higher margins, from the concession sales. As people are returning to theaters, it looks like AMC is coming back to life.

Now what

Buying AMC stock might still be a gamble, as evidenced by the declining stock price. The company is recovering, but it's not quite there yet. And what may outlast the decrease in revenue is the debt that the company took on to stay afloat when theaters closed, and the losses it's still posting. So far in 2022 AMC has raised another $950 million in debt to cover other debts. Even before paying down its debt, the company is burning through cash to cover operational costs.

AMC might yet return to completely normal operations, and the past two years might turn into a blip on the overall business radar. But I wouldn't recommend buying AMC stock just yet.