AMC Theatres lost $4.6 billion last year. Why is its CEO so happy?

Adam Aron, CEO of AMC Theatres.
(Matt Rourke / AP)

The world’s largest theater chain, AMC Entertainment, has put a number on the damage the COVID-19 pandemic has done to its business.

Leawood, Kan.-based AMC lost $4.59 billion in 2020, according to the company’s full-year earnings report released Wednesday. That compares to AMC’s net loss of $149 million in 2019. The company’s full-year revenue fell 77% to $1.24 billion versus a year ago.

AMC’s report painted a bleak picture of the state of the theatrical film business during a brutal year in which much of the industry was closed and Hollywood delayed its biggest movies over and over again.


And yet, Chief Executive Adam Aron sounded ebullient on AMC‘s conference call with analysts, extoling the company’s ability to raise money to stay alive during the last year, the pace of vaccinations and the upcoming schedule of Hollywood films.

“I am optimistic and confident about AMC’s ability to weather this COVID-19 storm,” he said. “Our focus is no longer on survival.”

Now, he said, the company is turning toward the next year, when it hopes to benefit from a possible surge in moviegoing.

Theaters are hoping for new blockbusters to play in the coming weeks as cinemas reopen. Nonetheless, challenges remain. The release date for Marvel’s “Black Widow” is set for May 7, but Universal pushed “F9” back by a month to June 25. Other movie studios have moved their films forward on the schedule, including Sony Pictures’ “Peter Rabbit” sequel.

AMC has avoided bankruptcy multiple times during the pandemic by raising money from Wall Street. The company said it now has more than $1 billion in cash on hand. The theater chain also permanently closed 60 lower-performing theaters — 48 domestic locations and 12 international cinemas.

In January, its stock price got a huge boost from Reddit-inspired traders buying up shares of struggling companies, most notably bricks-and-mortar video game retailer GameStop. During the trading frenzy, former controlling shareholder Dalian Wanda Group of China reduced its stake to less than 10% of AMC shares, the company disclosed.


Interest in AMC was so high Wednesday that the webcast for its earnings call with analysts stopped accepting new listeners. Social media users tweeted gleefully during the session with fireworks emojis and the $AMC symbol denoting its stock ticker, and some day traders livestreamed the event on YouTube.

Shares of AMC are up 365% so far this year. The stock closed at $9.85 Wednesday, down 68 cents, or 6.5%.

Amid the struggles, Aron’s compensation package doubled to more than $20 million, thanks to a $5 million bonus and stock awards totaling $14.8 million. AMC’s proxy statement credited him with his efforts to keep the chain afloat during shutdowns.

The company managed to take advantage of the surge by selling stock and slashed its debt. The company in January completed an at-the-market stock offering through which it raked in $579.8 million in capital. Also in January, the company converted $600 million in senior notes held by private equity firm Silver Lake into stock, which the investment firm promptly sold to cash in on the rally.

Aron addressed the “Reddit rally,” while noting that the vast majority of the more than $2 billion in capital the company raised through the pandemic came before AMC became a WallStreetBets darling.

“As I look at all those retail investors, I realize and truly take to heart one thing among others,” Aron said. “Americans have a strong affection for AMC. They’ve been going to our movie theaters for years and years or for decades and decades.”

The shares also have been buoyed by growing optimism about the return of theaters, encouraged by the rollout of vaccines, the reopening of New York City cinemas last week and the solid box office results for Warner Bros.’ “Tom & Jerry,” which also was released on HBO Max. Thanks to new guidance from California Gov. Gavin Newsom, Aron said AMC may be able to open its Los Angeles theaters as soon as March 19.

Still, there’s a chasm of opinion between analysts about the prospects for AMC itself, which still has a debt load of more than $5 billion.

Wedbush Securities analyst Michael Pachter on Monday doubled his 12-month price target to $5, roughly 50% of its recent price, while noting that debt is still an issue. “AMC remains the highest risk [company] in the exhibition space given its exceedingly high debt balance,” he wrote in a recent note to clients.

Wall Street provocateur Rich Greenfield on Wednesday initiated coverage of the company with a “sell” rating, writing that the shares are “dramatically overvalued.” He cited recent comments by media industry executives saying they expect moviegoing behavior to change long-term after a year of consumers getting movies when they want them in the home, rather than having to wait long after they run in theaters.

“The future of moviegoing is not in doubt,” Greenfield and his colleagues wrote in a blog post. “The future of AMC Theatres, however, is very much in doubt.”

AMC also reported fourth-quarter earnings — which analysts consider largely irrelevant because of the pandemic — that were far worse than a year earlier but were better than Wall Street expected.

The company posted sales of $162.5 million, down 89% from the prior year. Analysts on average expected revenues of $142 million. The company’s quarterly loss was $3.15 a share, less than the $3.24 loss analysts were expecting, according to FactSet.