AMC Entertainment Holdings (AMC), a popular retail-investor group, had two big announcements on Monday: Wanda Group’s announcement that it had relinquished control of the company, reducing its stake to 9.8%; Second, the company announced the reopening of two theaters in Los Angeles a year after the outbreak.
Shares of AMC Cinemas, the world’s largest theater operator, closed up 25.81 percent at $14.04 on the news. Some analysts believe that once vaccination becomes more widespread, people will feel comfortable going to public places and moviegoers will return to theaters.
On the same day the Oscar nominations were announced, two AMC Cinemas (market code: AMC) in Burbank and Century City reopened. For nearly a year, audiences have been watching big movies at home on streaming devices, rather than at Hollywood’s traditional cinema releases.
Chad Beynon, an analyst at Macquarie, pointed to pent-up demand from cinema audiences last week and raised his price target on AMC shares to $5 from $4.
The stock is up more than 500% so far this year, fueled not only by optimistic estimates that the worst of the disruption during the outbreak has passed, but also by a surge in retail trading at WSB. The Standard & Poor’s 500 Index is up 4.99 percent this year.
AMC and other theater chains have reopened in smaller markets around the country since last summer, but have only recently been allowed to reopen operations in the lucrative California and New York markets. New York City cinemas are scheduled to reopen earlier this month. In a statement on Monday, AMC said it would open all of its remaining 23 theaters in Los Angeles County (and nearly all of its 56 theaters in California) on March 19, assuming state and local government approvals.
“The reopening of theaters in Los Angeles County and across California is an important moment for AMC, our guests, our employees, our production partners, and the movie theater industry,” AMC Chief Executive Adam Aron said in a statement. For AMC, the city of Los Angeles is twice the size of the movie market in New York City, which was the studio’s highest-grossing market over the weekend. For cinema operators, getting local government approval to reopen is only part of the challenge of last year. Hollywood studios have either delayed the release of blockbusters or moved them to streaming or through a mix of streaming and cinema as theaters shut down.
The main question for operators now is: Will Hollywood go back to the old way of showing in theaters and then moving to streaming on demand for home audiences at a later date? Or has it changed the way audiences see movies forever?
Eric Wold, an analyst at B. Riley, has a neutral rating on AMC. “We believe this is just one example of the film industry restarting after the outbreak, and we remain optimistic about the industry’s prospects as moviegoers increasingly return to theaters over the next 12-24 months,” Wald said in a recent note.