Which is a Better Investment Right Now: AMC or IMAX?

AMC (NYSE: AMC) is the biggest movie theater chain in the world and has been operating for over a century. IMAX (NYSE: IMAX) is responsible for the biggest screen you can watch your blockbuster on and is over 50 years old. Both companies faced serious headwinds from the forced shutdowns and social distancing implemented around the world thanks to COVID-19. As more people are getting vaccinated and returning to normalcy, there is no doubt that theater sales will recover, so which is the better investment right now: AMC or IMAX?

AMC: bulls vs bears:

AMC weathered the storm and survived what is perhaps the most challenging calamity ever to hit the movie theater industry; in fact, its stock price is way above pre-pandemic numbers, no doubt bolstered by its status as a meme stock. Not surprisingly, the company’s revenue was up over 2,200% and attendance surged nearly the same amount year-over-year (YoY), according to its Q2 2021 report. More importantly, AMC has secured an additional $1.25 billion in new equity capital, raising its liquidity to over $2 billion; this pretty much guarantees that it can survive whatever additional blows the pandemic throws at it.

Sister organizations HBO and Warner Brothers have agreed to release all its blockbusters simultaneously in theaters and on streamer HBO Max this year. Additionally, Disney is following suit. This will no doubt impact ticket sales as people can just watch popular movies like ‘Dune’ and ‘The Many Saints of Newark’ in the comfort of their own home and not worry about potentially catching a strain of COVID (which hasn’t been completely eradicated quite yet). As for numbers, AMC expects to post a loss of $1.48 billion this year and $400 million next year and is over $5 billion in debt. 

IMAX: bulls vs bears:

IMAX acts as an antidote to the dual-release paradigm because it offers a viewing experience that can never be replicated at home. The aforementioned ‘Dune,’ with its massive foreign landscapes and sweeping music commands to be experienced in IMAX. Even though viewers might choose to watch the film at home, film fans, of which there are many, will no doubt attend IMAX screenings. Analysts expect IMAX to grow sales by 67% this year and 56% next year and to post earnings of $0.92 in 2022.

The only bear is the box office recovery, which has been slower than anticipated. Additionally, with the shift to at-home viewing, which has no doubt been accelerated by the pandemic, IMAX screens might suffer some bleed-over impact from traditional screenings. 

So, which is the better investment right now?

IMAX is the safer bet as its financials are more solid, its price isn’t inflated by the meme realm, and it will be more profitable than AMC in the coming years.

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