AMC Entertainment shares plunge after rival movie chain Cineworld warned it could file for Chapter 11 bankruptcy.
AMC, the world’s largest movie theater chain, has joined the ranks ofas retail investors bet on a turnaround and drive its stock up more than 1,000%. Its shares fell more than 38% on Monday to $11.05 after officials at UK-based Cineworld said in a statement on Monday that it was trying to restructure its debt, which could include a declaration of bankruptcy.
“Strategic options by which Cineworld can achieve its restructuring goals include a possible voluntary Chapter 11 filing in the United States and associated ancillary proceedings in other jurisdictions as part of an orderly implementation process,” it said. said the company.
Movie theaters took a major financial hit during thebecause clients were avoiding group settings. Adding to their challenges, some movie studios are forgoing theatrical releases altogether and have instead created highly anticipated films on streaming services.
AMC and Cineworld hoped moviegoers would return to theaters in droves once the majority of pandemic restrictions were lifted, but patrons did not fill seats in the volumes the companies wanted. A May survey from Morning Consult found that many Americans continue to avoid movie theaters due to ongoing COVID-19 concerns as well as high movie ticket prices.
In March, Cineworld announced a loss of $656 million and a debt of $4.8 million for 2021. AMC earlier this month announced losses of $121 million for its second quarter of this year, as well as revenues of $1.1 billion.
Responding to Cineworld’s bankruptcy speech, AMC CEO Adam Aron said in a statement last week that AMC was not going the same way. The slate of movies slated for this fall is “relatively small,” but it’s expected to pick up again in late 2022 and into 2023, Aron said.
“AMC ended the second quarter of 2022 with over $1 billion in liquidity, thanks to significant amounts of cash raised in calendar years 2020 and 2021,” he said. “We remain confident about AMC’s future.”
AMC operates 11,100 screens in nearly 1,000 locations in the United States, Europe and the Middle East.
Cineworld, which owns Regal Cinemas, is the world’s second largest cinema operator with 9,189 screens at 751 locations.
Also weighing on the books is Cineworld – a billion dollar legal settlement imposed late last year after a failed merger with Canadian cinema chain Cineplex. Cineworld appealed the settlement in court, but a judge’s decision is still pending.
AMC isn’t the only meme stock to crash recently.last week after a major shareholder, billionaire Ryan Cohen, sold his entire stake and made a profit of $178 million.