Movie theater stocks experienced a boost on Thursday following the announcement by Taylor Swift that a concert film of her highly successful Eras Tour will be released in cinemas on Oct. 13. While the tour has undoubtedly been a significant success for the cities hosting the shows, its impact on theater operators, such as AMC Entertainment Holdings, is expected to be minimal.
The concert film titled "Taylor Swift: The Eras Tour" will be shown at AMC, Regal, and Cinemark theaters across the United States. Additionally, the film will have screenings on IMAX screens. At AMC, ticket prices are approximately $20 for adults and $13 for children and seniors.
The process of purchasing tickets for Swift's tour was highly competitive, sparking discussions about markups and fees and leading to increased regulatory scrutiny of Ticketmaster's parent company, Live Nation Entertainment.
Nevertheless, the Eras Tour is projected to be the highest-grossing tour in concert history. Swift's dedicated fan base, known as Swifties, have filled football stadiums across the country and have contributed to the local economies of the concert cities. The Federal Reserve Bank of Philadelphia reported earlier this year that May saw the strongest month for hotel revenue since the start of the pandemic, primarily due to an influx of guests attending Taylor Swift concerts in the city.
It comes as no surprise that the news of the tour's cinematic release caused a 6% increase in AMC stock, reaching $13.51 during Thursday trading. Cinemark stock, on the other hand, saw a 2.2% increase.
However, it is unlikely that the film will have a significant impact on the underlying businesses of these theater chains.
AMC stock has experienced a sharp decline of 83% over the past 12 months and is down 64% in 2023. These figures account for a recent reverse stock split and the conversion of AMC Preferred Equity units, or APEs, to common shares by the company.
AMC Looks to Raise Cash through Stock Sales
The moves by AMC Entertainment Holdings Inc. will give the company greater flexibility in raising cash by selling stock. However, before Wall Street analysts match the enthusiasm of the stock's retail fanbase, AMC will need to demonstrate a fundamental change in its long-term prospects. This fanbase is known for congregating on social media platforms like Reddit and Twitter.
Concert Movies and the Movie Theater Industry
It is worth noting that concert movies do not make up a significant portion of the movie theater business. For instance, in 2010, "Justin Bieber: Never Say Never" grossed $99 million. Similarly, a tour by Swift in 2018 was released on Netflix. And last year, Elton John's farewell concert at Dodger Stadium was streamed live on Disney+.
According to Wedbush analyst Michael Pachter, concert movies are unlikely to receive the same level of promotion as traditional films, resulting in a lower level of awareness. When asked about the potential opening day earnings of a concert movie, he predicts box office figures to be under $10 million. He does mention that with proper promotion, the earnings could be 2-3 times higher, but it will still struggle to compete with blockbusters like "Avatar" or "Avengers."
AMC's Ticket Ordering Systems
On a positive note, AMC and its peers have shown stability in their ticket ordering websites. These websites have been able to handle demand effectively without experiencing significant crashes or long wait times. This stands in contrast to the concert ticket sales for Ticketmaster's Eras Tour, which were plagued by technical issues.
In fact, AMC acknowledged in its press release that no ticketing system in history has been able to handle the high demand from Taylor Swift fans during ticket sales. To address this challenge, the company has upgraded its systems to accommodate more than five times the usual ticket-buying traffic. So far, the upgrades seem to be working well.
Victoria's Secret reports a surprising loss of $1.4 million and a decline in sales of 6.2% in the second quarter. CEO remains optimistic for a rebound.
Western Digital reveals plans to separate its businesses and reports a narrower loss for Q1, resulting in a surge in stock price. More details here.