Should AMC Entertainment Manage To Disclose Upbeat Q2 2022 Earnings Today, It Would Seriously Curtail the Hubris of Bearish Fund Managers Such as Clifford Asness

Should AMC Entertainment Manage To Disclose Upbeat Q2 2022 Earnings Today, It Would Seriously Curtail the Hubris of Bearish Fund Managers Such as Clifford Asness

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

AMC Entertainment (NYSE:AMC) is about to disclose its Q2 2022 earnings with its proverbial head held high. After all, the company is likely to have witnessed its strongest quarter in the post-COVID era, benefitting from a marked increase in global theater attendance as well as average ticket prices.

For Q1 2022, AMC had reported $785.7 million in revenue, exceeding consensus expectations by over 5 percent. Similarly, an adjusted EBITDA of -$61.7 million for the quarter corresponded to a year-over-year improvement of $233 million.

Crucially, AMC expects to continue recording sequential improvements in its cash burn, culminating in a positive operating cash flow in the fourth quarter of 2022.

As part of AMC’s Q1 earnings call, its CEO Adam Aron had issued a veiled threat to short-sellers, promising to “pounce” on the stock’s detractors at an opportune time:

“We are constantly exploring the smartest courses of action, and I promise you that we will pounce, but only when the timing is right.”

On the fundamental front, the company recently retired $72.5 million of its debt at a discount. The movie theater chain has also acquired a 22 percent stake in the gold miner, Hycroft Mining.

As far as Q2 2022 is concerned, analysts expect the company to report $1.18 billion in revenue vs. $444.7 million in the corresponding period last year. Adjusted EPS estimates are currently pegged at -$0.23.

This brings us to the crux of the matter. The disgraced pharma executive Martin Shkreli had taunted AMC bulls last month by publishing his bearish take on the stock on Reddit. As per Shkreli’s blog post, AMC can only expect to generate $3 billion to $4 billion in admission revenues and $800 million in EBITDA annually in the best-case scenario. Consequently, Shkreli has accorded an $11 stock price target to AMC shares, based on a 7 percent discount rate and a return to $5 billion in total revenues per annum. By the end of this decade, Shkreli sees AMC printing around $7 billion in annual revenues.

However, Shkreli was not the only prominent figure to have taken a dig at AMC recently. Clifford Asness’ AQR Capital had disclosed a short position in AMC back in June while challenging the bulls to “try to hurt us.”

After the tweet above, Asness tried to defend his short position by terming it a joke.

However, the fact remains that AMC is up around 80 percent relative to its year-to-date low of $10.37 on the 11th of May. Consequently, should the company post stellar results today, the stock’s ensuing gains are likely to chip the “money” that Asness claims to have made on AMC this year. We wait with bated breath.

This post will be updated with AMC’s earnings once they are released.

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