AMC Shares Plummet More Than 25% After Company Issues Q2 Profit, Revenue Warning

Shares of cinema chain AMC Entertainment Holding Inc. were down more than 25% in premarket trade on Wednesday after the company warned that it expects to swing to a loss when it reports second-quarter earnings after the bell on Aug. 7. AMC announced cost reductions and said it expects revenue for the second quarter to be in the range of $1.200 billion and $1.204 billion, compared with revenue of $764 million last year. Analysts surveyed by FactSet expected AMC to report $1.233 billion in revenue. The company said it expects to report a loss of between $178.5 million and $174.5 million after reporting earnings of $24.0 million in the same quarter a year ago. FactSet is expecting a loss of $5.0 million. B. Riley analyst Eric Wold, while acknowledging he's been on the wrong side of the trade for months, said he maintains a buy rating on AMC. He remains positive on AMC and the cinema group during what he said is likely a short-term box office blip. Analysts at RBC Capital said they need proof. "We were low on the street for the second quarter, we expected weakness due to higher costs, so the results don't change our fundamental view," the analysts wrote in a note to investors. "Valuation is attractive on management's guide, however, we see risk that AMC will be a 'show me' story until negative newsflow subsides." AMC shares have dropped more than 38% in the year to date and more than 25% in the trailing 12-month period. By comparison, the S&P 500 index is up nearly 11% in the year and close to 15% in the last 12 months.