AMC Entertainment shares are rallying 6% on the heels of a good weekend at the box office. The gains couldn’t come soon enough for AMC investors, who have been on a roller coaster ride in August so far. AMC shares started the month at USD 37 only to fall below the USD 30 level on Aug. 4. The stock has been climbing higher since then in fits and starts.
While AMC has proven to mostly trade on internet sentiment given its status as a meme stock, shares could also be reacting to some positive developments. The film “Free Guy,” which stars Ryan Reynolds, reportedly generated a better than expected USD 28.4 million in North American ticket sales across theatres. On a global scale, the movie brought in more than USD 50 million.
Investors aren’t the only ones celebrating. Reynolds revealed on Twitter that Disney is interested in a “Free Guy” sequel. Disney along with its subsidiary 20th Century Studios are behind the movie.
— Ryan Reynolds (@VancityReynolds) August 14, 2021
Analysts were anticipating sales of a lesser USD 15 million-17 million on fears that the rise of the delta variant would keep potential moviegoers at home. Clearly, they were wrong, as people put aside their COVID-related fears and ventured out for entertainment in droves.
Movie Theater Bump
AMC could continue to capture more of the ticket sales pie given the dynamics surrounding this particular movie. Steven Frankel, senior research analyst at Colliers Securities, is cited by Barron’s as saying that “Free Guy” will be available in theaters on an exclusive basis for a month and a half prior to making its way onto HBO Max.
Films associated with Disney typically will make their way onto Disney+ sooner, which gives theaters like AMC more competition. Disney decided, however, to give theaters a shot at exclusivity for “Free Guy” along with “Shang-Chi” and the “Legend of the Ten Rings” for a 45-day stretch. Disney CEO Bob Chapek reportedly attributed the decision to “recent signs of increased confidence in moviegoing.”
AMC was not the only movie chain stock to benefit. Investors also sent shares of Cinemark Holdings higher, with the stock rising 2% on the day. IMAX shares did not join the rally and instead were down fractionally.