Shares of the nation’s largest theater chain bucked a down market Tuesday, fortifying their advance of the day before after news that cinemas in New York City will open soon after a year-long lockdown as Covid infection rates fall in the city and state.
AMC Ent. stock is up 16% in late morning trades after surging 15% yesterday (the jump this time more on fundamentals not the Reddit-fueled buying frenzy that gripped it last month, then subsided). All major stock indexes are down. Wedbush analyst Michael Pachter called the announcement by New York Governor Andrew Cuomo a “ray of light” for AMC, whose NYC locations are among its highest performing theaters. New York City cinemas can resume operations March 5 and the chain said yesterday it will have its doors open.
Shuttered cinemas in the nation’s major movie markets have crippled studio theatrical releasing, diminished the pipeline of films available to theaters and further damping attendance in cinemas that are open but hanging on by the seat of their pants at reduced capacity in a Covid-19 world.
“We view this as an incredibly positive announcement both for movie theaters in that city that have been closed for nearly a year as well as for the entire industry in bringing stability back to the upcoming film slate,” agreed Eric Wold of B Riley Securities. Film slate visibility through June was still uncomfortably high with the three top movie-going cities closed — NYC, Los Angeles, and San Francisco. “This NYC reopening news could help to provide incremental slate stability.”
New York City and Los Angeles contributed, respectively, 7% and 9% of U.S. box office revenue in 2019.
“We continue to believe that having those two cities open may be critical to keeping a film on the current release date — although there is still plenty of time for that to occur before the slate heats up this spring,” he said. He said California Governor Gavin Newsom appears more flexible in reopening the state and “at this point, we could see San Francisco Bay Area theaters potentially reopen before Los Angeles theaters and a timetable established to bring Los Angeles back online as infection rates improve further.”
California works on a colored tier system. Infections are also moderating there and Gov. Newsom indicated last week he thinks a “substantial” number of California counties will start to see less restrictive Covid measures.
He noted that opening New York City theaters means movie reviews by local media outlets, which is a consideration for studios in whether or not to release a film or delay it.
Wall Street and industry players have been clamoring for everyone to notice that solid movie theater attendance in countries like China, Japan and Australia, which have done a better job controlling Covid and reopened exhibition earlier, bodes well for movie going trends and demand in the U.S.
Imax for instance, earlier this month, touted a spectacular opening for Detective Chinatown 3 over Chinese New Year. The film’s $397 million debut surpassed that of Avengers: Endgame to become the biggest in any single market of all time. Imax also had a record-setting Chinese New Year opening weekend of $25 million, up 45% from 2019.