A Cinemark theater in California, in 2019.
Darryl Brooks/Dreamstime.comYou can practically smell the popcorn. Shares of Cinemark Holdings and AMC Entertainment both jumped as investors look ahead to the summer movie season.
Though Cinemark reported an increased net loss of $208.2 million for the first quarter on Friday morning, shares of the theater firm popped after the company said it has reached deals with major film studios to hash out how their movies appear in Cinemark’s theaters before they hit streaming services.
The company announced it has now reached deals Warner Bros. Picture Group, The Walt Disney Company, Paramount Pictures, and Sony Pictures Entertainment. It said the deals build on a previously announced agreement with Universal Filmed Entertainment Group. Under that deal, films that open to $50 million or more of box-office sales are exclusive to theaters for at least five full weekends.
Cinemark stock (ticker: CNK) closed up 5.3% to $21.57. Its report followed earnings news Thursday evening from AMC Entertainment (AMC), which disclosed a net loss of $576.2 million, or $1.42 a share. AMC gained 5.7% to $9.51 on Friday.
Investors seemed to focus on the company’s expectations for an eventual return to normal.
AMC CEO Adam Aron touted a lineup of blockbuster films like Black Widow and Fast & Furious 9 during the company’s earnings call, which could meet pent-up demand as pandemic restrictions fade.
Aron also embraced new shareholders that flocked to the stock from social media sites like Reddit early in the year, hoping to drive the price higher by forcing funds that had bet against AMC to buy to close their positions. He said he would match a $50,000 donation from AMC to the Dian Fossey Gorilla Fund—a charity popular on the WallStreetBets Reddit forum. Users there lovingly refer to each other as “apes” for their unconventional investing strategies and bets on stocks like GameStop (GME).
“Just go on Twitter, just go on Reddit, just go on YouTube, read what these people write,” Aron said during the company’s earnings call. “They love AMC. And these are not people who are just going to be investors in AMC. These are going to be customers of AMC who come to our theaters and enjoy watching movies at our theaters as paying guests.”
Write to editors@barrons.com
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May 08, 2021 at 04:53AM
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Movie-Theater Stocks Leap Despite Quarterly Losses - Barron's
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