AMC’s profitability hangs on the domestic box office topping $2 billion in Q4. Here’s what would need to happen

AMC Entertainment has set a new, more attainable target for the 2021 domestic box office in its bid for a profitable fourth quarter.

The movie theater chain said Monday that if the box-office grosses from October, November and December hit $2 billion it would be able to post positive cash flow in the fourth quarter.

Its previous target, which it predicted in August, was for the full-year domestic box office to reach at least $5.2 billion.

Analysts are split on whether they think a $2 billion domestic box office in the fourth quarter is attainable, with some saying it is easily achievable and others appearing a bit more skeptical.

“Our published estimates assume that Q4 domestic box office can reach or exceed $2 billion,” said Alicia Reese, analyst at Wedbush. “With these assumptions and AMC’s demonstrated expense management, we expect AMC to reach positive EBITDA in Q4.” 

The $2 billion outlook for the fourth quarter assumes that the box office will garner around 75% of what it collected during the same period in 2019, around $2.9 billion, according to Comscore data.

However, the movie slate for the rest of the year faces tough comparisons with the films released two years prior, said Eric Handler of MKM Partners. Those included “Joker,” “Frozen II,” “Jumanji: The Next Level” and “Star Wars: The Rise of Skywalker,” which generated hefty returns at the domestic box office.

With around seven weeks left before the end of the year, box-office analysts are predicting the final ticket sales count will come in between $4 billion and $4.7 billion.

Prior to the pandemic, the box office was fairly easy to predict based on decades of data. However, with variable release strategies, ongoing changes to safety measures and continued caution from some demographics, it’s been challenging to project how individual films will perform and narrow down full-year expectations.

Through the first three quarters of the year, the domestic box office garnered $2.4 billion, according to data from Comscore. Including October’s haul and the first week of November, the year-to-date box office stands at $3.2 billion. In order to reach AMC’s goal, the full-year box office would need to top $4.4 billion.

“While October was the best month of the pandemic era in North America and gives a strong tailwind for the last two months of the year in theaters, it will still be a heavy lift to pack $2 billion into the final quarter of this most unusual box-office year,” said Paul Dergarabedian, senior media analyst at Comscore.

AMC’s reliance on an unpredictable box office is likely why it has been seeking out new avenues to generate revenue. In addition to acquiring new theater leases and offering new content, such as pretaped concerts and live sports, AMC will expand into the popcorn retail business and is eyeing ventures into cryptocurrency, NFTs and credit cards.

Strong results in October, when ticket sales reached record highs for the year, suggest that AMC’s $2 billion target is within reach. After all, the month generated $637.3 million, from films such as “Halloween Kills,” “Venom: Let There Be Carnage” and “No Time to Die,” leaving $1.36 billion that would need to be delivered in November and December.

However, box-office analysts foresee November collecting a smaller haul, especially as it has fewer blockbuster titles than October and more independent, Oscar-bait films, which typically see smaller results.

Disney’s latest Marvel film, “Eternals,” garnered $71 million during its domestic debut over the weekend, but analysts are predicting it will see a steep drop-off in ticket sales in its second week because of lackluster reviews and poor word-of-mouth.

Next week, Sony’s “Ghostbusters Afterlife” arrives exclusively in theaters. The promise of the return of fan-favorite characters from the iconic ’80s films could lure in older moviegoers, but it’s unclear if the younger audiences that fuel much of the box office will turn out in droves. The film is currently looking at an opening weekend estimate of between $45 million and $65 million.

“King Richard” and “House of Gucci” are garnering attention ahead of their respective releases later this month. But as their content skews toward mature audiences, which have been slower to return to theaters, analysts aren’t convinced they will move the needle in terms of ticket sales. Both films are biographical, with one focusing on the father and early coach of tennis stars Venus and Serena Williams, and the other on Patrizia Reggiani’s marriage into the Gucci family and its deadly consequences.

November also features the release of Disney’s newest animated feature, “Encanto.” With Covid vaccinations now available to children, this film could have a solid opening. Other children’s content has struggled to garner audiences because of coronavirus concerns. The availability of kids’ vaccines could also bode well for the December release of Universal’s “Sing 2.”

December could fare a bit better than November, with “Spider-Man: No Way Home,” in particular, expected to dominate the box office. However, its Dec. 17 release means that the 2021 box office will benefit from its ticket sales for only two weeks.

Many box-office analysts foresee the film tallying around $100 million for its opening. However, if it follows a second-week drop similar to that of other Marvel films, it will likely bring in less than $200 million domestically before Dec. 31.

“West Side Story” is expected to see a box office similar to those of “King Richard” and “House of Gucci.” Based on the musical by Leonard Bernstein and Stephen Sondheim, the film is expected to predominantly lure in older audiences.

“The Matrix Resurrections,” too, will rely on nostalgia, as well as general audiences’ affinity for actor Keanu Reeves. It’s unclear if younger audiences will flock to this feature, especially since it will also be available on HBO Max the same day.

“Indeed the heat is on for all the titles set for the holiday season to perform at their maximum potential,” said Dergarabedian.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.