Shares of AMC were up by 11.5% in pre-market trading on March 1 as the movie theatre operator will be paying out bonuses to its top executives, according to a company filing. AMC’s CEO Adam Aron will receive $3.75 million as a bonus while other top executives will receive bonuses ranging from $173,875 to $507,500.
According to the AMC (AMC) filing, the compensation committee has approved special incentive cash bonuses in addition to the initial special incentive bonuses awarded in October last year under the company’s annual incentive plan (AIP).
The reason for these bonuses has been “to recognize the extraordinary efforts of employees to maintain the Company’s business and preserve stockholder value during the COVID-19 pandemic, encourage continued engagement and retention, and incentivize our management and employees during the continuing and unprecedented difficult business conditions.”
AMC has been significantly impacted due to the COVID-19 pandemic as the operator had to keep its theatres closed for part of last year and was teetering on the brink of bankruptcy. However, in January, the company secured capital of $917 million to meet its financial needs.
Furthermore, last month, New York Governor Andrew Cuomo announced that theatres in New York can re-open in the first week of March. The beleaguered theatre chain has 13 locations in NYC, which it plans to open on March 5 in accordance with the required cleaning protocols and 25% capacity limitations. (See AMC Entertainment stock analysis on TipRanks)
Shares of AMC have ballooned almost 88% in the past three months.
On Feb. 23, Wedbush analyst Michael Pachter reiterated a Hold rating and a price target of $2.50 on the stock. Pachter said, “We think there is significant pent-up desire to go out to the movies, and this could potentially add meaningfully to AMC’s March/Q1 and Q2 results given that AMC’s NYC theatres are some of its highest performing theatres in its domestic circuit. Should this entice other densely populated areas to re-open, this could in turn entice studios to maintain Q2 – Q3 release slate plans.”
At the same time, Pachter believes that the desire to head out to the movies might be overcome by caution while cinema goers wait until they are vaccinated, and transmission rates decline. With this in mind, the analyst doesn’t expect attendance levels to begin to normalize “until July at the earliest.”
The rest of the Street is sidelined on the stock with a Hold consensus rating based on 3 Holds and 1 Sell. The average analyst price target of $3 implies around 63% downside potential to current levels.
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