‘Substantial Doubt’: AMC’s Warning of a Potential Downfall
One of COVID-19's most noticeable side effects was the closing of many businesses. Hollywood production was no exception to this pandemic.
Recently, a reopening guideline for Hollywood’s reopening was released and while there’s light at the end of this tunnel, some businesses in Hollywood might never see the light.
AMC Theatres, which is the largest movie theater chain the United States, has ‘substantial doubt’ that they can remain in business even after the Pandemic is over.
According to CNN, AMC said on Wednesday that is has “substantial doubt’ that it can remain open due to closing location that are scattered across the world during the COVID-19 pandemic.
AMC theatre closed their establishments earlier this year, resulting in a revenue lost between $2.1 billion and $2.4 billion in just the first quarter alone. The first quarter ended March 31. The company has gone record stating that they its revenue dropped to 941.5 million, a 22% decline from 1.2 billion in the quarter last year. The second quarter is being predicted to be worst than the first for AMC theatres.
The movie-chain said in a filing that they are ‘generating no revenue.’
We are generating effectively no revenue.” The company released in a regulatory filing Wednesday.
As of April 30, AMC theatres said it had a cash balance of $718.3 million. Contrary to the announcement, AMC’s stock rose 4% following an 8% decline in the early morning trading on Wednesday. While the company has gone on record stating that it possessed the resources for reopening “this summer or later,” AMC wrote in the filing:
“Our liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and our ability to generate revenue.”
In in a hypothetically context, even if movie theaters are able to operate again, it is highly unlikely they’ll be operating at full power. You can expect them to operate at a reduced capacity due to enforcing social distancing guidelines, similar to how restaurants in reopened states have operated. Also you have to take into consideration that people may not go back to the theaters. Some people may feel uncomfortable going out yet. That could also be due to the fact that many movies that were scheduled to be released in theatres are going to released on demand for a more at home experience and it sees no end even as movie theaters return to business.
