AMC Theaters, the largest theater chain in the U.S, warned investors that the company could run out of cash by early 2021 in a public filing on Tuesday. The announcement follows previous attempts by AMC and other movie theaters to navigate the on-going consequences of the COVID-19 pandemic on the industry.
The filing states that significantly reduced attendance (a 76 percent drop compared to last year) and a lack of 2020 film releases contributed to the losses. And with little-to-no certainty as to when theater-going as we once knew it might resume, AMC has struggled to hold on. Tuesday marked a 7.8 percent plunge in shares of the company, and the dip has continued into early trading this morning. AMC’s stock, with a market value of $446 million USD, has plunged 44 percent over the course of this year.
By last Friday, AMC was able to open 494 of its 598 U.S. theaters at a limited capacity of 20 percent to 40 percent, depending on jurisdiction guidelines. However, the theaters still shuttered — in California, Maryland, New York, North Carolina and Washington — represent a fourth of the company’s annual revenue despite comprising only 17 percent of AMC outposts.
AMC won’t be going down without a fight though. The company has also made moves to renegotiate leases with landlords and look into debt and equity financing as well as potential asset sales. A deal with Universal, struck in July, could also help to curb losses; AMC would play films in theaters for a minimum of 17 days before the films arrive to digital platforms, where AMC would share in the revenue from streams.
But the grass isn’t always greener on the other side. The “streaming wars” have only continued to heat up in the past few months with a rumored Netflix subscription increase following competition from Disney+ and other services.