AMC Could Face Movie Competition From Across the Pond

AMC Entertainment is just starting to get its sea legs in the stock market after a challenging pandemic year. Now that the economy has reopened, the threat of the delta variant notwithstanding, the movie chain could be facing yet another headwind in the form of competition from a distant contender.

British cinema company Cineworld is eyeing a public listing in the U.S. in hopes of raising capital to strengthen its balance sheet, according to reports. Cineworld is already publicly traded in London, and now it is considering bringing its Regal Cinema unit, which the company acquired three years ago, public in the U.S.

Similar to AMC, Cineworld has had to compete with streaming content. And also similar to AMC, Cineworld is saddled with debt. Worse, its balance sheet health took a hit while the economy was on lockdown. Cineworld has watched from the sidelines as shares of its U.S.-based competitor AMC have rallied thanks to the tailwind of individual investors, and it wants a shot at a similar fate.

Cineworld Capital

Cineworld is the second-largest cinema chain in the world,  and it was forced to temporarily close its theatres in the U.K. and in the U.S. when the pandemic hit.  The company was forced to lay off tens of thousands of workers at the time, and it has been exploring ways to raise capital ever since.

Management seemingly believes that getting on the radar of Wall Street analysts and investors will improve its liquidity, as it has done for AMC.

AMC Recovery

Meanwhile, AMC has been charting its own recovery path as it looks to reinvent itself among moviegoers and investors alike.

That turnaround is not yet complete, but the company sees a light at the end of the tunnel. AMC in Q2 amassed USD 1.25 billion in total equity and has access to USD 2 billion in liquidity.

Thanks to money raised in May and June, AMC ended the June 30, 2021 quarter with MORE THAN $2 BILLION OF LIQUIDITY (cash in the bank or undrawn revolving credit line). Right around DOUBLE the highest quarter ending liquidity level AMC has ever had before in our 101 year history!

— Adam Aron (@CEOAdam) August 9, 2021

AMC is currently the movie stock du jour in the U.S, and should Cineworld follow through with its idea of a U.S. listing, it would give investors another option. On the other hand, AMC’s stock is up nearly 5% on the day, so there could be enough demand to go around for the sector.