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Why Shares of AMC Entertainment Holdings, Inc. Plunged 53% in 2017


What happened 

Shares of movie theater operator AMC Entertainment Holdings, Inc. (NYSE:AMC) plunged 53.1% in 2017, according to data provided by S&P Global Market Intelligence, as profits began to deteriorate at the box office. The company grew rapidly after acquiring Odeon & UCI Cinemas as well as Nordic Cinema Group for a combined $2.2 billion. That’s about the same amount of value as AMC’s shares lost in 2017. 

So what 

Problems began in earnest when second-quarter results were released, showing a loss of $176.5 million on a $202.6 million writedown of NCM assets. What’s really shocking is that revenue for the first three quarters of the year was up 59.7% to $2.33 billion, but adjusted EBITDA was only up 27.1% to $534.3 million. 

Empty movie theater with a white screen.

Image source: Getty Images.

AMC is a high-fixed-cost business, so the company has a lot of operating leverage. That means that if revenue rises 1%, we would expect earnings to rise much more than 1%….



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