Long-suffering investors in AMC Entertainment (NYSE:AMC) will welcome the announcement of theatres reopening on July 15. Not only did AMC rapidly shrink staff and rental obligations with landlords, but it also positioned itself for a sharp recovery in revenue rebounding. Much of AMC’s prospects depend on the gradual and safe re-opening of its theatres.
AMC said on June 18 that it will open most U.S. locations on July 15. 450 theatres open on that day, followed by a remaining 150 on July 24. The capacity limitations are as follows:
-First, 30% capacity on July 15.
-An increase to 40% in Phase 2 and then 50% during Phase 3, starting at
around Labor Day.
-Full capacity on or after Thanksgiving.
Short-sellers bet on AMC’s solvency, given its high debt load. But the company has strong creditor support and their willingness to prefer business re-opening gradually. If AMC were to file for bankruptcy, both shareholders and bondholders would lose more.
Markets rewarded brave investors who bet on the airline and cruise ship recovery. The likely recovery in the movie theatre market gives investors another chance to earn strong returns in the near-term. AMC stock has a good chance of bouncing back, should markets as a whole hold up, too.
Disclosure: at the time of writing, the author owns shares of AMC.
