AMC Entertainment Holdings, Inc. AMC is likely to benefit from the expansion of premium theater formats, seating upgrades and subscription programs. A focus on its GO Plan bodes well. However, declining attendance and stiff competition pose concerns.

Factors Driving AMC Stock

Expansion of Premium Large Format (PLF) Screens: AMC remains the global leader in premium theater formats, and its expansion in this space is the key to its growth strategy. The company plans to upgrade more IMAX auditoriums to the highly popular IMAX with Laser format in 2025 and 2026. Additionally, it is set to introduce more Dolby Cinema screens and expand its in-house PLF brand, Prime at AMC. A significant move includes the rollout of XL screens in the United States, following their successful debut in Europe. With plans to introduce 50-100 XL screens in 2025 and an additional 150 in 2026, AMC is positioning itself as a leader in high-quality cinema experiences.

Emphasis on AMC’s GO Plan: The GO Plan is AMC’s response to the anticipated resurgence in moviegoing, aiming to drive attendance and profitability. The strategy revolves around enhancing guest experience across its U.S. theaters and international Odeon chain. Since the company boasts industry-leading per-patron spending metrics, increasing attendance directly boosts EBITDA, positioning the company for stronger financial performance.

Enhancing Guest Comfort to Drive Attendance: AMC is also prioritizing the improvement of seating comfort, particularly in its high-performing theaters. Recent luxury seating upgrades at AMC Burbank 16 (Los Angeles), AMC Lincoln Square 13 and AMC Empire 25 (Manhattan) have yielded remarkable guest satisfaction and financial performance. These enhancements have propelled these theaters to the top of the company’s revenue charts, reaffirming the importance of upgrading high-traffic locations. Going forward, AMC plans to extend these upgrades to other profitable theaters.

Strengthening Loyalty & Subscription Programs: A key pillar of AMC’s strategy is its focus on customer retention through innovative loyalty and subscription programs. The newly launched AMC Stubs Premier GO! tier, a free loyalty program, encourages increased moviegoing and food & beverage spending. Starting with 300,000 pre-enrolled members in early 2025, this program is expected to drive significant engagement.

AMC is also improving its highly successful A-List subscription program by increasing the weekly movie limit from three to four, lowering the minimum signup age from 16 to 13, and introducing a digital ID verification system. Moreover, the company will launch the new A-List Classic program, offering a more affordable subscription option for budget-conscious moviegoers. These initiatives are likely to drive growth in the coming periods.

Concerns for AMC Stock

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Shares of AMC Entertainment have declined 32.3% in the past three months compared with the industry’s fall of 11.2%. A weaker-than-expected post-pandemic recovery in theatrical attendance, coupled with a challenging film release calendar, has weighed on investor sentiment.

AMC’s primary challenge remains the slow recovery of movie theater attendance. While management expects the box office to improve in 2025 and 2026, industry-wide attendance is still down nearly 40% compared to 2019 levels. Even with higher per-patron profitability, lower foot traffic limits revenue growth. Relying on a long-term box office rebound adds uncertainty, especially as consumer preferences shift toward streaming services.

The cinema industry faces increasing competition from at-home entertainment options, including streaming giants like Netflix and Amazon Prime Video. Despite AMC’s focus on enhancing in-theater experiences, the fundamental shift in consumer behavior poses long-term risks.

AMC’s Zacks Rank and Stocks to Consider

AMC Entertainment currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Consumer Discretionary sector are RCI Hospitality Holdings, Inc. RICK, Mattel, Inc. MAT and Royal Caribbean Cruises Ltd. RCL.

RCI Hospitality currently sports a Zacks Rank #1 (Strong Buy). The company delivered a trailing four-quarter earnings surprise of negative 62.9%, on average. The stock has declined 20.5% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for RCI Hospitality’s 2025 sales and earnings per share (EPS) indicates growth of 2.5% and 1,278.8%, respectively, from year-ago levels.

Mattel currently flaunts a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 37.6%, on average. The stock has gained 1.8% in the past year.

The Zacks Consensus Estimate for Mattel’s 2025 sales and EPS indicates growth of 1.4% and 4.9%, respectively, from year-ago levels.

Royal Caribbean currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 15.7%, on average. The stock has rallied 57% in the past year.

The Zacks Consensus Estimate for Royal Caribbean’s 2025 sales and EPS indicates growth of 9.1% and 26.7%, respectively, from year-ago levels.

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This article originally published on Zacks Investment Research (zacks.com).

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