AMC’s profitability hangs on the domestic box office topping $2

AMC Entertainment has set a new, more attainable target for the 2021 domestic box office in its bid for a profitable fourth quarter.

The movie theater chain said Monday that if the box-office grosses from October, November and December hit $2 billion it would be able to post positive cash flow in the fourth quarter.

Its previous target, which it predicted in August, was for the full-year domestic box office to reach at least $5.2 billion.

Analysts are split on whether they think a $2 billion domestic box office in the fourth quarter is attainable, with some saying it is easily achievable and others appearing a bit more skeptical.

“Our published estimates assume that Q4 domestic box office can reach or exceed $2 billion,” said Alicia Reese, analyst at Wedbush. “With these assumptions and AMC’s demonstrated expense management, we expect AMC to reach positive EBITDA in Q4.” 

The $2 billion outlook for the fourth quarter assumes that the box office will garner around 75% of what it collected during the same period in 2019, around $2.9 billion, according to Comscore data.

However, the movie slate for the rest of the year faces tough comparisons with the films released two years prior, said Eric Handler of MKM Partners. Those included “Joker,” “Frozen II,” “Jumanji: The Next Level” and “Star Wars: The Rise of Skywalker,” which generated hefty returns at the domestic box office.

With around seven weeks left before the end of the year, box-office analysts are predicting the final ticket sales count will come in between $4 billion and $4.7 billion.

Prior to the pandemic, the box office was fairly easy to predict based on decades of data. However, with variable release strategies, ongoing changes to safety measures and continued caution from some demographics, it’s been challenging to project how individual films will perform and narrow down full-year expectations.

Through the first three quarters of the year, the domestic box office garnered $2.4 billion, according to data from Comscore. Including October’s haul and the first week of November, the year-to-date box office stands at $3.2 billion. In order to reach AMC’s goal, the full-year box office would need to top $4.4 billion.

“While October was the best month of the pandemic era in North America and gives a strong tailwind for the last two months of the year in theaters, it will still be a heavy lift to pack $2 billion into the final quarter of this most unusual box-office year,” said Paul Dergarabedian, senior media analyst at Comscore.

AMC’s reliance on an unpredictable box office is likely why it has been seeking out new avenues to generate revenue. In addition to acquiring new theater leases and offering new content, such as pretaped concerts and live sports, AMC will expand into the popcorn retail business and is eyeing ventures into cryptocurrency, NFTs and credit cards.