It was no surprise that AMC Entertainment (AMC 1.80%) reported a fairly strong quarter considering it had pre-announced its results at the beginning of February. Still, it was the best performance from the theater operator in the last two years. Commenting on all of AMC's critics who thought the cinema stock was doomed, CEO Adam Aron said, "they were wrong, they were wrong, they were wrong."
Yet because the theater chain's quarterly results were mostly predicated on the success of Spider-man: No Way Home, AMC still needs to prove it can replicate its success without a massive blockbuster film propping up the business.
Image source: Getty Images.
Beyond the big screen
Aron has proved he's willing to think beyond just what the next Hollywood showstopper will be. From accepting cryptocurrencies as payment to possibly partnering with fellow meme stock GameStop on some unnamed venture, the cinema CEO is trying to expand the chain's horizons beyond just movies.
Although some of the ideas are riskier than others, such as getting back into actual content creation, AMC is trying new things to keep its momentum going.
During AMC's earnings conference call with analysts, Aron cited six specific new ideas he's implementing to transform the theater operator into a solid business again. Whether any of them will pan out to become a profitable value-add for investors remains to be seen.
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 one Spider-man NFT recently sold for $17,000 on the secondary market.
2. Cryptocurrencies. Bitcoin(BTC 0.44%), Ethereum(ETH 0.56%), and Litecoin(LTC 0.87%) were all accepted as payments through AMC's website and mobile app, and this month Dogecoin(DOGE 0.58%) and Shiba Inu(SHIB 1.49%) will join the list.
3. Variable pricing. Charging more for movie tickets on weekends when more people go to the theater is being experimented with, though Aron noted AMC has done it for years in Europe where premium seating is commonplace, just like at concerts and sporting events.
4. Retail popcorn sales. AMC will be trying to brand its popcorn as something to have outside of the theater, and will begin selling it in retail stores, kiosks, through home delivery, and more.
5. Acquisitions. AMC acquired seven theaters in the past few months, adding to those it acquired last year.
6. Branded credit card. Pointing to AMC's 4 million shareholders and 25 million households members in its AMC Stubs program, Aron believes there is significant profit potential in a co-branded credit card, an area that the CEO has some familiarity with from his time at United Airlines.
Image source: Getty Images.
Embracing the little guy
Aron had a seventh point, which he called recovery, agility, and transformation, that he says will be the flag around which AMC rallies this year and next. That will include continuing to embrace the theater operator's small retail investors.
He noted that excluding indexes and institutional investors, individuals own 90% of AMC's 516 million shares outstanding. Although some have mistaken that to mean the little guy has displaced Wall Street's monied interests as the majority shareholders of the company, it's clear Aron keeps them top of mind as he continues to offer benefits directed specifically to them.
Aron's going to need them if he wants to transform AMC beyond just a movie house, as he seems to indicate. He said critics who think he's trying to just get the company back to where it was pre-pandemic are too myopic. "Our ambition is much more grand than that," he told analysts.
He says AMC has a war chest of $1.8 billion in liquidity available, and it intends to use those funds to create a much bigger, different company than the one we know.
NYSE: AMC
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Time to make good
That all sounds grandiose, but Aron still needs to translate the vision into viable revenue streams and profits. That has yet to be proven possible, and none of these six strategies actually seem particularly transformative. Movies are still his bread-and-butter, and the industry remains in decline.
I like that Aron continues to stretch the boundaries of what he thinks is possible for the movie theater chain, but that doesn't make AMC Entertainment a worthwhile investment, at least not yet.
