AMC Entertainment has 6 bold ideas to transform the movie theater chain

0

Iit was no surprise that AMC Entertainment (NYSE: AMC) announced a fairly strong quarter given that it had pre-announced its results in early February. Still, it was the theater operator’s best performance in the past two years. Commenting on all of the AMC critics who thought the cinema was doomed, CEO Adam Aron said, “They were wrong, they were wrong, they were wrong.”

Yet, because the cinema chain’s quarterly results relied primarily on the success of Spider-man: No Coming HomeAMC has yet to prove that it can replicate its success without a huge blockbuster movie to back the company up.

Image source: Getty Images.

Beyond the big screen

Aron has proven he’s willing to think beyond what the next Hollywood hit will be. From accepting cryptocurrencies as a means of payment to possibly in partnership with another meme stock GameStop on an unnamed venture, the cinema CEO is trying to broaden the channel’s horizons beyond movies.

While some ideas are more risky than others, like returning to content creation, AMC is trying new things to keep momentum going.

On AMC’s earnings conference call with analysts, Aron cited six specific new ideas he’s implementing to turn the theater operator back into a solid business. It remains to be seen whether any of them will become a profitable added value for investors.

Here are the six strategies AMC is undertaking:

1. Non-Fungible Tokens. Aron highlighted the development of non-fungible tokens, or NFTs, for moviegoer attendance, noting a Spiderman NFT recently sold for $17,000 on the secondary market.

2. Cryptocurrencies. Bitcoin(CRYPTO: BTC), Ethere are(CRYPTO:ETH)and Litecoin(CRYPTO: LTC) were all accepted as payments through AMC’s website and mobile app, and this month Dogecoin(CRYPT: DOGE) and shiba inus(CRYPTO: SHIB) will join the list.

3. Variable Pricing. Charging more for movie tickets on weekends when more people go to the theater is experimented with, though Aron noted that AMC has been doing this for years in Europe where premium seats are commonplace, just like during concerts and sporting events.

4. Retail sales of popcorn. AMC will try to score your popcorn as something to have outside of the theater, and will start selling it in retail stores, newsstands, home delivery, etc.

5. Purchases. AMC has acquired seven theaters in recent months, adding to those it acquired last year.

6. Brand name credit card. Pointing to AMC’s 4 million shareholders and 25 million member households in its AMC Stubs program, Aron believes there is significant profit potential in a co-branded credit card, an area the CEO has been familiar with since his switch to United Airlines.

Moviegoers with buckets of popcorn.

Image source: Getty Images.

Kiss the little guy

Aron had a seventh point, which he called recovery, agility and transformation, which he believes will be the flag AMC will rally around this year and next. This will include continuing to embrace the theater operator’s smaller retail investors.

He noted that excluding indices and institutional investors, individuals own 90% of AMC’s 516 million outstanding shares. Although some have mistaken this to mean that the little guy has replaced Wall Street money interests as the majority shareholder of the company, it’s clear Aron is keeping them top of mind as he continues to deliver benefits. which are specifically intended for them.

Aron is going to need it if he wants to transform AMC beyond just a movie theater, as he seems to indicate. He said critics who think he’s just trying to get the company back to where it was before the pandemic are too short-sighted. “Our ambition is much bigger than that,” he told analysts.

He says that AMC has a war chest of $1.8 billion in cash and that it intends to use those funds to build a much bigger and different company than we know.

It’s time to do good

This all sounds grand, but Aron has yet to translate the vision into viable revenue streams and profits. This has yet to be proven, and none of these six strategies actually seem particularly transformative. Films are still his bread and butter, and the industry remains in decline.

I love that Aron continues to push the boundaries of what he thinks is possible for the movie channelbut that doesn’t make AMC Entertainment a worthwhile investment, at least not yet.

10 Stocks We Like Better Than AMC Entertainment Holdings
When our award-winning team of analysts have stock advice, it can pay to listen. After all, the newsletter they’ve been putting out for over a decade, Motley Fool Equity Advisortripled the market.*

They have just revealed what they believe to be the ten best stocks for investors to buy now…and AMC Entertainment Holdings wasn’t one of them! That’s right – they think these 10 stocks are even better buys.

View all 10 stocks

* Portfolio Advisor Returns as of January 20, 2022

Rich Duprey has no position in the stocks mentioned. The Motley Fool owns and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Share.

Comments are closed.