Written by Norman Isaac Mwambazi

AMC to accept bitcoin as payment for movie tickets by end of year

Theatre operator AMC Entertainment is one of the companies that gained prominence in January when retail traders, through discussions on …

Theatre operator AMC Entertainment is one of the companies that gained prominence in January when retail traders, through discussions on social media, especially Reddit’s WallStreetBets forum, decided to gang up and invest heavily in it, something that didn’t sit well with Wall Street institutional investors and hedge funds.

This frenzy, which prompted stock brokerage firm Robinhood to suspend trading for hours, helped AMC raise the much-needed capital to stay afloat after being heavily affected by the coronavirus pandemic that stopped people from going to the theatres as per the stay at home directives from the authorities. Since then, the company’s stock has risen more than 1,500% and has since taken up the mock name, “meme stock.” AMC stock currently doesn’t have any “Buy” recommendation from analysts, but it has five “Hold” and four “Sell” ratings.

Now that the economy is reopening and more people are expected to go to the theatres and watch new releases or reruns of already released movies, AMC is looking at diversifying its ticket payment structure to make it easy for moviegoers to buy tickets, but also act as an investment of sorts. Talk about hitting two birds with one stone.

During an earnings call yesterday, Monday, August 9, 2021, as the company released its earnings report for the second quarter of the 2021 fiscal year (Q2 FY2021), AMC Chief Executive Officer (CEO) Adam Aron announced that the company would start accepting bitcoin as payment for movie tickets and concessions if purchased online at all of its U.S. theatres, by the end of this year.

Aron said that AMC would have the required I.T. infrastructure and computing facilities to handle bitcoin payments for movie tickets before 2022. When this bitcoin payment system goes live, AMC will be the first theatre operator to accept this cryptocurrency as a mode of payment. Since hitting its lowest price of below $30,000 last month, Bitcoin has bounced back, appreciating in value to its current price of $45,330.00. This is the highest the cryptocurrency has traded in three months.

Bitcoin’s surge had a ripple effect on the broad cryptocurrency market at other peer coins like Dash, Etherereum, and Litecoin, among others, all benefited, rising as high as 5% on Monday.

The world’s largest cryptocurrency is known to be highly volatile, as are other cryptocurrencies, so customers and investors are wondering what the purchasing process would be. Aron did not help matters as he didn’t divulge details about how AMC will handle Bitcoin payments as analysts and investors would like to know. We are sure this information will be availed to us once the system is ready.

In other payment news, Aron also said moviegoers would have other ticket payment options soon as AMC theatres will start accepting Alphabet’s Google Play and Apple’s Apple Pay.

It is worth noting that AMC will not be the first major company that accepts bitcoin. Other companies that accept this cryptocurrency include online payment services provider PayPal Holdings Inc. (ticker: PYPL), coffeehouse giant Starbucks Corporation (ticker: SBUX), tech giant Microsoft Corporation (ticker: MSFT), among others. Automaker Tesla Inc. (ticker: TSLA) had also started accepting bitcoin early this year, but CEO Elon Musk retracted on that decision citing environmental concerns.

The controversial tech guru, whose tweets about the cryptocurrency have led to price fluctuations of bitcoin and other digital assets like Ethereum, and Dogecoin among others, said in July that Tesla might start accepting bitcoin again once it confirms that bitcoin miners use 50% or above of renewable energy during the mining process of this finite valuable virtual coin.

According to Currency Exchange International, over 15,000 businesses worldwide accept bitcoin as payment for goods and services. In the U.S. alone, the New York Digital Investment Group estimates that about 46 million Americans own at least one share of bitcoin. That is about 17% of the U.S. adult population. AMC will be betting on a measurable number of these to spend some portion of their bitcoins on movie tickets.

AMC Q2 FY2021 Earnings Report

As mentioned earlier, AMC Entertainment Holdings Inc. (ticker: AMC) released its Q2 FY2021 earnings report. To the surprise of analysts and investors alike, it beat Wall Street expectations, which fuelled the company’s stock rise of 4% in after-hours trading yesterday. The stock has gained another 3.36% today, trading at $33.80 a share.

AMC’s surprisingly positive earnings report shows that the company posted a narrower-than-expected loss of 71 cents per share in Q2 FY2021 while its revenue grew to $444 million. To put that into context, consensus analysts expected AMC to suffer a loss of 94 cents per share and generate revenue of $382.25 million for the quarter.

AMC’s Q2 FY2021 performance is way better than its performance in the same quarter last year (Q2 FY2020) when its revenue stood at just $19 million, primarily attributed to the COVID-19 pandemic that kept moviegoers indoors. Although there is tremendous growth, it is still way below what the company raked in in Q2 FY2019, which was $1.5 billion.

The company’s Q2 FY2021 performance brought a smile to its top execs and shareholders, with CEO Aron calling it a “transformational quarter for AMC” in a statement.

In the same statement, Aron noted that AMC raised $1.25 billion of new equity capital (with commissions and fees) in Q2 FY2021, which boosted the company’s liquidity (cash and undrawn revolving lines of credit) to more than $2 billion. This is almost double its previous position- the highest ever such mark in its 101-year history.

With this stellar performance, the company expects to keep growing as the economy reopens more. However, there is still concern that the increasing infections of the more contagious Delta variant of the coronavirus could halt the upward movement of the company’s revenue that has been opening its theatre doors to moviegoers under social distancing guidelines.

Founded in 1920 and headquartered in Leawood, Kansas, United States, AMC has the largest share of the U.S. theatre market, operating 978 theatres and 10,833 screens.