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AMC upgraded as ‘Godzilla vs. Kong’ renews confidence in the domestic box office

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The AMC Empire 25 off Times Square is open as New York City’s cinemas reopen for the first time in a year following the coronavirus shutdown, on March 5, 2021.

Angela Weiss | AFP | Getty Images

“Godzilla vs. Kong” is restoring confidence in future of the box office.

The Warner Bros.’ film, which posted the best opening weekend of any film released during the coronavirus pandemic, “destroys lingering concerns around the theatrical window importance and demonstrates a solid path to resurgence,” wrote B. Riley Securities analyst Eric Wold in a report on Monday.

“Godzilla vs. Kong” signals that consumers are eager to head to the cinemas for new blockbuster features and suggests that the upcoming summer slate could see similar success.

Wold also upgraded AMC Entertainment to “buy” in his Monday note, raising his price target to $13 from $7. Shares of the company rose more than 6% on Monday and have jumped more then 370% since January, in part due to renewed confidence in the company’s ability to survive the rest of the pandemic. AMC has a market value of $4.2 billion.

“We have remained impressed with management’s ability to weather the pandemic headwinds by both strengthening the balance sheet and negotiating with landlords to improve the cash runway into 2022,” he wrote. “And as the largest exhibitor in North America that also operates the highest number of premium IMAX screens, we view AMC as well positioned to benefit from the industry’s projected resurgence and return to pre-pandemic attendance levels by 2023.”

AMC was battered by the pandemic. The company was already in debt from acquiring smaller theater chains and outfitting its existing locations with luxury seating. Closures, capacity restrictions and a lack of new film releases weighed heavy on the company’s finances.

The performance of “Godzilla vs. Kong” is a bright light for AMC and the rest of the movie theater industry.

The film, which debuted domestically Wednesday and was released on HBO Max, secured $32.2 million over Friday, Saturday and Sunday and garnered $48.5 million for the full five-day Easter weekend in the U.S. and Canada.

“We believe consumers want to leave the house and return to the theater and these results are very telling especially considering that the movie was available for free to HBO Max subscribers at the same time as the theatrical release,” Wold wrote.

Notably, less than 60% of the North American theater base was open over the weekend and theater capacity restrictions continue to hover between 25% and 50%.

“We feel these results are impressive considering the prior film, ‘Godzilla: King of the Monsters’ opened to only $47.8M back in May 2019 (with all theaters open and without any capacity restrictions),” Wold wrote.

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