The share price of Wanda's AMC theater line plunged nearly 27%, setting three historical records

Wanda's AMC Entertainment Holdings, the largest theater line in the United States, once fell nearly 27% in the U.S. stock market. At the close, AMC's share price fell 26.92%, and its market value evaporated by more than US$740 million (approximately RMB 4.97 billion).

Original title: Stimulation! The share price of Wanda's AMC theater line plunged nearly 27%, setting three historical records.

Yesterday (August 2) night, Wanda's AMC Entertainment Holdings, the largest theater line in the United States, once plunged nearly 27% in the U.S. stock market. At the close, AMC's share price fell 26.92%, and its market value evaporated by more than US$740 million (approximately RMB 4.97 billion).

The reporter found that AMC set three historical records on the trading day: the largest decline in a single day, the largest trading volume in a single day, the stock price hit a record low, and the intraday low hit US$15.15.

What happened? Previously, the company released second-quarter results forecasts, predicting revenue of between $1.2 billion and $1.204 billion, a net loss of between $174.5 million and $178.5 million, and a loss per share of between $1.34 and $1.36, compared with 24 cents per share for the same period last year.

AMC also bluntly stated in its performance forecast that "the next quarter will be very challenging."

Investors who have bought stocks that have not yet sold are now losing money.

Reporters noticed that AMC's share price has fallen by more than 50% this year, from about US$35., fell to the current level of around US$15, and has fallen below AMC's 2013 offering price (US$18), the lowest in history.

In other words, no matter when investors entered the market before, as long as they have not sold halfway, they will all lose money at present.

AMC's stock price trend since its listing

. Regarding the reasons for the loss, AMC's public statement explained that it was mainly due to the decrease in the number of viewers entering the movie theater in the second quarter and the significant poor performance of the North American box office. Statistics released by AMC can be found that the overall box office in North America fell by about 3.3% in the second quarter, of which the U.S. box office fell by about 4.4% compared with the same period in 2016. At present, AMC's revenue mainly comes from box office business and theater food sales.

In addition to box office, AMC also revealed that the loss in the second quarter was related to the pre-tax impairment charge of the company's investment in the acquisition of theater company Carmike at the end of last year. According to public information, in 2016, AMC acquired the American theater line Carmike for more than US$1 billion. However, after the transaction was approved, Carmike's market value fell sharply below its book value, and AMC had to make provision for impairment.

Faced with performance difficulties, AMC decided to launch a cost-cutting plan, including reducing operating hours and laying off employees. The plan will be implemented in July and lay off 3200 people before the end of the year. In the future, AMC will also adopt strategic pricing, promotional activities and other measures to attract audiences back to theaters.

However, the reality seems to be much more severe than imagined. Judging from the 2017 full-year performance forecast announced by AMC, the performance pressure faced by AMC is not small. AMC expects total revenue this year to be between US$5.1 billion and US$5.23 billion; between US$125 million and US$150 million.

Based on expected results for 2017, AMC will experience its first annual loss since its listing in 2013. According to the AMC annual report, since Wanda Group acquired AMC in 2012, AMC's performance has improved rapidly. From 2013 to 2016, AMC's net income was US$364 million, US$64 million, US$104 million, and US$112 million respectively.

It is worth mentioning that on July 17, Wanda was placed on the negative watch list by S & P, with a rating of "BBB-". At the close of U.S. stocks that day, AMC fell 10%. On the 18th, AMC made an urgent statement: The four M & A transactions completed from 2015 to earlier this year used entirely the company's own funds and loans from the U.S. banking industry.

Reuters said AMC CEO Adam Aron said that apart from holding three seats on the company's board of directors, Wanda "does not actively participate in AMC's daily operations."

Wanda's overseas asset performance is frequently troubled.

Public information shows that AMC Cinema is a subsidiary of Dalian Wanda Group in China and one of the world's largest chain theaters. It has the largest market share in the United States, with a total of 8218 screens and 661 cinemas. Its parent company Wanda Cinema Line has more than 348 cinemas in China.

On

May 21, 2012, according to the official website of AMC, Wanda Group acquired a 100% stake in the company for US$2.6 billion (HK$20.186 billion). This is the second largest overseas acquisition by a China company since Geely Automobile acquired Volvo Cars.

After winning AMC, Wanda Group successively completed the acquisition of American film and television companies such as Legendary Pictures;AMC also entered a period of rapid expansion, acquiring European cinema giant Odeon&UCI, American cinema Carmike and other cinema companies, becoming the world's largest cinema company. According to AMC's 2016 annual report, AMC has more than 10,000 large screens in overseas markets such as Australia and the United Kingdom.

According to the Beijing Business Daily, while a series of acquisitions expanded Wanda Group's film and television landscape, AMC's performance also turned a profit. However, inevitably, the risks brought by mergers and acquisitions and the instability of the film and television market still caused AMC's performance to suffer a sharp decline again. The same situation happened to another film and television company, Legendary Pictures.

Since Wanda Group's high-profile acquisition of Legendary Pictures in 2016, the industry has always questioned Legendary Pictures 'performance. According to the June 2016 Wanda Cinema Line announcement, Legendary Pictures 'net profit in 2014 was-2.24 billion yuan, and the net profit in 2015 was-3.63 billion yuan. However, Legendary Pictures 'performance losses have not been significantly reversed after being acquired by Wanda Group, like AMC.

Editor: Mary