Movie Theaters Claw Back Customers, But Much Fewer Than Before the Pandemic

Major movie theater chains including AMC Entertainment Holdings Inc. (AMC) and IMAX Corp. (IMAX) may report lukewarm earnings as box office takings lag pre-pandemic levels.

Another reason for laggard results: The proliferation of streaming platforms and COVID concern that hasn't completely dissipated.

AMC could report a net loss of about $190 million, according to estimates collected by Visible Alpha. That would narrower than a year ago, yet still wider than $130 million in the first quarter of 2019. Revenue is expected to rise 22% to $961 million, but that's still a fifth lower than four years ago. AMC shares, a popular meme stock, rose 20% in the first quarter of the year, although they fell to a 52-week low of $3.77 in early January.

IMAX may fare slightly better, swinging to a $3.5 million profit compared with a $13.6 million loss a year ago as revenue rises by a third to $79.3 million. That would still be far below its $8.3 million net income in the first quarter of 2019. Its shares rose 35% in the first quarter and are close to their 52-week highs.

The company could benefit from a shift toward premium theaters as well as a return to cinema experiences for customers in China after COVID lockdowns, according to Wedbush Securities.

U.S. box offices pulled in $1.7 billion in the first quarter, up about 28% year-over-year. Those results lag 2019 and are being fueled by a smaller slate of movie releases—180 for the quarter, compared to 302 in early 2019.

The top 10 movies accounted for about three-quarters of all box office totals in the first quarter, compared with 56% before COVID. Wedbush analysts expect returns to rise as the number of movies released increases.

Some tech firms, meantime, are making moves to enter the arena to diversify their content offerings. Apple Inc. (AAPL) is reportedly planning to spend $1 billion or more annually to produce movies for theatrical release as well as streaming sports.

Last month, Amazon.com Inc. (AMZN) was said to be considering the purchase of AMC. In each case, both tech companies may hope that investing in movies will help to drive subscriber growth for their streaming platforms.