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Why Did AMC Entertainment (AMC) Hit All-Time Low Today?

AMC Entertainment AMC stock plummeted to a new all-time low on Wednesday morning after the movie theater chain previewed less-than stellar second-quarter earnings.

The company announced after Tuesday’s closing bell that it now expects to report an earnings loss of $1.34 to $1.36 per share in the second quarter. AMC’s newly weakened quarterly projections stem in part from a dismal U.S. box-office.

AMC bombed in after-hours trading Tuesday, and shares of the movie theater giant, which operates theaters around the globe, fell 26.38% in mid-morning trading on Wednesday. The company hit a new 52-week and all-time low of $15.15 per share in intraday trading. AMC is currently a Zacks Rank #4 (Sell).

The movie theater chain reported that its U.S. box office revenue fell 4.4% year-over-year, while overall North American box office revenue dipped 3.3%.

AMC now projects quarterly revenues between $1.2 billion to $1.204 billion, which is up year-over-year. However, the company expects to report a net loss of between $178.5 million and $174.5 million, compared to earnings of $24.0 million in the year-ago period.

The company’s updated, full-year 2017 guidance now predicts total revenues between $5.10 billion and $5.23 billion. AMC projects a net loss of $150 million to $125 million and a loss per diluted share of $1.17 to $0.97.

AMC also noted that it was negatively impacted by a $202.6 million pre-tax impairment charge for its National CineMedia investment. AMC was forced to sell 17 theaters as part of a March settlement agreement with the U.S. Department of Justice for its acquisition of Carmike Cinemas.

On top of AMC’s new weak second-quarter guidance, the company also faces a potential threat from overseas.

Reports surfaced last month that the Chinese government is set to prevent banks from lending money to AMC’s parent company Dalian Wanda. The Chinese government will now greatly regulate Dalian Wanda’s overseas dealings by preventing Chinese banks from funding too many of the company’s projects and investments outside of China.

Beijing is set to curb the firm’s aggressive string of offshore purchases, and they might think about coming down harder on Dalian Wanda because it already reportedly violated Beijing's new 2016 overseas investment restrictions.

AMC is set to report its second-quarter earnings next Monday, August 7.

Other Movie Theater Chains

It would seem nearly impossible that other movie theater companies wouldn’t feel some negative impact from AMC’s newly low expectations, especially when considering that the company cited box-office dips as a major reason.

Shares of Regal Entertainment (RGC) fell 5.19%, while Imax IMAX dropped 8.84%, which sent both to new 52-week intraday trading lows. Cinemark CNK also dipped around 5.96% in morning trading.

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