(Bloomberg) — The fundamentals at AMC Entertainment Holdings Inc. have deteriorated since before the Covid-19 pandemic with streaming services battering the company, short seller Jim Chanos said.
“The reality is that things have gotten worse at this company,” Chanos said in an interview on CNBC. “So clearly something has changed. And that change is streaming.” Chanos said his firm, Kynikos Associates, has a small put position in AMC representing less than 1% of its assets.
While AMC reported earnings on Monday that beat analysts’ estimates, investors are mistakenly comparing that to 2020 results when they should be comparing them to 2019, Chanos said.
“In that case, AMC revenues were down 70% in the second quarter, versus the second quarter of 2019,” he said. “Their ticket sales were down 75%.” That’s far worse than other companies that are “reopening” currently, such as gym chain Planet Fitness Inc., which was down 25% versus the second quarter of 2019, Chanos said. “So something else is happening in movie theaters.”
AMC’s stock price has soared this year, driven largely by Reddit retail traders boosting the price of the world’s largest theater chain. AMC has gained 1,592% since January alone.
Other highlights from the interview:
“We had one of the Archegos stocks that we couldn’t figure out why it was going up every single day until it collapsed in March,” Chanos said. “It was really kind of crazy.”In the wake of that, like a lot of fundamental bears, Kynikos has “reduced the size and of our short positions and the nature of them,” either by using options or keeping positions lower than they normally would, Chanos said.
(Updates with AMC comments starting in the third paragraph.)
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