AMC Entertainment Holdings Inc. (AMC) has had a difficult time breaking out of its stock slump, falling ~50% from its 52-week high of ~$20 per share. At these levels, the stock sports a hefty dividend yield of ~7.5% with a healthy balance sheet and accelerating revenue and EPS growth. AMC is pouncing on Movie Pass’ collapse and rolled out its own loyalty program that has exceeded the company’s growth expectations. AMC’s rapidly growing loyalty program now has over 900,000 members to evolve a large segment of its business mix towards a subscription-based model to smooth out box office revenue fluctuations. This will allow durable and predictable revenue streams in the backdrop of changing box office dynamics. AMC is re-engaging the consumer via digital, mobile and loyalty program options, reformatting theaters to enhance the user experience and international expansion augmented by a healthy share buyback program. The stock looks very attractive considering its depressed valuation, solid Q2 earnings and company initiatives to drive the consumer experience. The long-term growth narrative remains intact while revenue continues to grow at a healthy clip with a strong movie slate to round out 2019, notably Joker, Terminator: Dark Fate, Frozen 2, Jumanji: The Next Level and Star Wars: The Rise of Skywalker.
Movie Pass’ Collapse and AMC’s A-List Subscriptions
Movie Pass is now history; however, the concept that the company brought to the market was the silver lining for AMC. AMC saw the overwhelming adoption by consumers and was forced to evolve by rolling out its own loyalty program via its A-List subscribers. AMC’s loyalty program now has over 850,000 subscribers which is expected to generate more than $150 million of annual recurring revenue. This will provide further penetration on the revenue front in excess of $300 million when factoring in food and beverage purchases and full-fare tickets purchased by bring-along guests such as family and friends. The loyalty program provides an opportunity to shift a segment of its business mix to a subscription-based model, providing durable and predictable revenue streams, mitigating box office fluctuations and driving long-term customer loyalty. Under this ticket subscription program, members can attend up to three movies per week in every available showtime and format. These membership numbers far exceed the company’s goal of 500,000 by mid-June 2019. Continue reading "AMC - Silver Lining of Movie Pass' Collapse"