AMC Entertainment (AMC) stock was down on Tuesday after the theater chain increased the number of ads it shows before movies. The additional ads at movie theaters are due to a deal with cinema advertiser National CineMedia (NCMI) that was announced last month. With this, AMC Entertainment joined the likes of Regal and Cinemark (CNK), both of which have signed advertising deals with National CineMedia.
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AMC Entertainment could benefit from this deal as it would receive more advertising revenue from its movie theaters. That’s something the company desperately needs, as its earnings performance has failed to impress investors or Wall Street.
For moviegoers, AMC Entertainment’s new ad deal means more time to spare before the actual showing starts. AMC noted that its showings now have 25 minutes to 30 minutes of ads and trailers leading up to the start of the film. The deal with National CineMedia includes premium ads, which air right before the movie starts. This is when viewers are most likely to be in their seats and not roaming the lobby for snacks and drinks.
AMC Restructures Debt and Secures New Financing
Alongside the increased ads, AMC Entertainment also announced a new debt and financing deal. It reached an agreement for $223.3 million in new financing and to convert a minimum of $143 million of its debt into equity. This agreement also settled litigation between the company and holders of its 7.5% senior secured notes due in 2029.
AMC stock was down 7.42% on Tuesday, extending its 27.76% year-to-date loss. The shares have also fallen 40.5% over the past 12 months.
Is AMC Entertainment Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for AMC Entertainment is Hold, based on six Buy and one Sell rating over the past three months. With that comes an average AMC stock price target of $2.92, representing a potential 1.39% upside for the shares.
