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AMC lays out bold post-pandemic recovery strategy

By Kevin Donovan

21:12, 1 March 2022

AMC Theater
AMC Theater - Photo: Capital.com

AMC Entertainment (AMC) outlined a seven-pillar plan to further restructure the embattled movie theatre operator meme-stock, that includes variable rate pricing, plans for a co-branded credit card and a big move into cryptocurrency and non-fungible tokens (NFTs).

As part of the fourth-quarter and year-end 2021 post-earnings conference call, CEO Adam Aron cited the success of its recent non-fungible token (NFT) program launch, which he reported AMC has awarded over 800,000 NFTs over five offerings, some of which have re-sold for up to $17,000, as a "big opportunity" for AMC to expand into digital assets and cryptocurrencies.

AMC reported mixed earnings results after the closing bell, losing $134.4m (£100.85m), or 26 cents per share, on $1.17bn in revenue, both in line with expectations. After market trading was marginally higher, with AMC shares up to $18.80, from Tuesday’s $18.32 closing share price.

AMC (NYSE: AMC) since March 2020 COVID-19 outbreakAMC (NYSE: AMC) since March 2020 COVID-19 outbreak - Photo: Koyfin

AMC stock traded relatively flat ahead of the earnings release Tuesday, closing at $18.32 per share, down 0.54% from the $19 opening share price. Trading was light at 40.4 million, versus the 51.3 million daily average volume.

But the post-earnings conference call with analysts and shareholders was when AMC CEO Adam Aron outlined the bold ideas potentially in the future for the Leawood, Kansas movie theatre operator.

'A big opportunity for us'

“NFTs and cryptocurrencies are a big opportunity for us,” Aron said on the call. “We’ve tended to give away NFTs to ticket buyers but we think it is possible to sell them in the future.”

Aron added AMC wants to collect a commission on the resale of future NFT offerings, “We have seen and will be collecting a commission on the re-sale of NFTs.”

Aron added he was aware of the resale of one of the Spider-Man NFTs for $17,000 on a secondary market exchange.

In addition to accepting Bitcoin, Bitcoin Cash and Litecoin in the second half of 2021, AMC will begin accepting both Dogecoin and Shiba Inu later this month and is actively exploring issuing its own cryptocurrency coin.

“We have to be careful about issuing crypto,” Aron said. “We expect there to be regulatory changes in crypto this year, but it’s something we are looking hard at.”

“But we like to stay on the right side of the law,” said Aron.

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Variable-rate pricing

Promising to be a “bold thinker when it comes to (ticket) pricing,” Aron noted that AMC could offer demand-based pricing, with higher ticket prices for certain movies or showtimes – and even for preferred seating beginning with this week’s release of The Batman.

Noting that outside of the US movie theatres often charge different prices for prime showtimes and premium seating, Aron compared a potential variable-rate pricing plan to that for live music or sporting events.  

“NFTs and cryptocurrencies are a big opportunity for us” ~ AMC CEO Adam Aron

AMC credit card

With the recent hiring of Eliot Hamlisch as chief marketing officer, with a background in consumer credit working at both American Express and Starwood Hotels & Resorts, Aron said AMC “could see significant profit if it launched a co-branded credit card.”

Popcorn delivery

While plans to sell AMC-branded popcorn at retail outlets, such as shopping mall kiosks and grocery stores were previously announced, Aron added AMC would partner with Uber Eats for a popcorn home-delivery service in the second or third quarter 2022.

“We know popcorn,” Aron declared. “On peak days we sell 50 tonnes of the stuff. Orville Redenbacher should look out.”

Record cash on hand

Aron also added the record $1.80bn liquidity on hand, $1.50bn of which is in cash or cash equivalents, AMC could even look to purchase some small, underperforming movie theatres.

“This $1.8 billion in cash is the greatest asset we have,” said Aron. “We could look to buy some small theatre circuits at bargain prices.”

Aron added the cash on hand may also be used to retire outstanding debt, although the recent $950m bond offering has reduced AMC debt service payments and extended the maturities by three years.

 

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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