AMC Entertainment (NYSE:AMC) has mirrored Hollywood’s difficulties over the past two decades, as shrinking box offices left the movie theater operator scrambling to stay alive. The pandemic may have permanently damaged the industry, as moviegoer attendance has continued to decline and remains well below pre-pandemic levels.
However, in March 2022, in a move that shocked investors, AMC invested nearly $28 million in the essentially defunct gold and silver miner Hycroft Mining (NASDAQ:HYMC) in exchange for a 22% stake in the company. CEO Adam Aron positioned it as leveraging AMC’s capital-raising skills to aid the idled miner, but it was a head-scratcher because it was so far removed from AMC’s core competency. While $28 million wasn’t much, it reeked of desperation from a company trying anything to generate returns for investors.
The investment had lain fairly dormant for three years, but early last month, AMC announced it had sold most of its stake in Hycroft to Eric Sprott for $24 million. As it still retained 64,000 shares and over 1 million warrants, AMC still held an interest in the miner and pocketed a small return on the investment. Unfortunately, AMC ended up losing tens of millions in potential profits because of the Sprott deal, underscoring why companies shouldn’t stray far beyond their core competencies.
The Movie Industry’s Long, Inexorable Decline
The theater business has faced challenges for years, but the pandemic accelerated its woes. Cinema closures in 2020 led to a sharp drop in attendance, and recovery has been slow. North American box office revenue reached $8.87 billion in 2025, up 1.5% from 2024’s $8.74 billion but down over 20% from 2019’s pre-pandemic levels. Ticket sales fell to 760 million in 2025 from over 800 million in 2024 and sit at just 64% of their pre-pandemic figures, according to a Bain & Co. survey of 5,000 U.S. consumers.
Streaming services have drawn audiences away, with shorter theatrical windows and home viewing habits entrenched during lockdowns. And if Netflix (NASDAQ:NFLX | NFLX Price Prediction) wins its bid for Warner Bros. Discovery (NASDAQ:WBD), it could hasten theaters’ decline further.
Consumer spending on streaming surged from 2010 to 2024, while box office revenue declined in real terms. The Bain report noted that half of consumers wish for more in-person events, yet this hasn’t boosted theaters. Premium formats like those offered by IMAX (NASDAQ:IMAX) help offset lower attendance through higher prices, but overall traffic remains down.
AMC’s Cash Crunch Forces Asset Sale
These trends left AMC reeling financially. The company ended September 2025 with $366 million in cash and about $4 billion in debt. Its third-quarter net loss widened to $298 million from $20.7 million a year earlier, driven by refinancing charges. Revenues fell to $1.3 billion from $1.34 billion. AMC restructured debt in July 2025, securing $244 million in new financing and converting $1.2 billion in debt to equity to address 2026 maturities.
Facing ongoing cash burn — it suffered $81 million in negative free cash flow for the third quarter — AMC sought liquidity. On Dec. 5, it transferred 2.34 million Hycroft shares, warrants for 1.34 million shares, and minor rights to Sprott. In return, AMC received $24.1 million in net proceeds and retained a reduced stake to capture potential upside.
Hycroft’s Surge and AMC’s Missed Opportunity
In a disappointing development for AMC, on Dec. 22, Hycroft announced high-grade silver intercepts at its Nevada mine, including up to 1,545 grams per ton, extending mineralization zones. It was timely news, given the massive run-up in silver’s price in 2025. Hycroft stock rocketed 49% higher, closing the day at $24.52 per share, with volume over 20 million. The stock hit $29.80 the next day before closing out 2025 at $23.77 per share, a 975% gain for the year.
At Dec. 5 prices, AMC’s transferred assets were worth about $27.8 million. On Dec. 22, they would have been valued at roughly $75.9 million, meaning AMC missed out on approximately $52 million in potential value. While AMC’s retained stake gained — the shares rose by $800,000, and the warrants by $13.8 million intrinsically — the sale gave AMC immediate cash but it forfeited larger gains from Hycroft’s rally.
Key Takeaway
This episode shows why companies should focus on their strengths. Peter Lynch’s concept of “de-worsification” describes grafting unrelated businesses onto core operations in empire-building efforts, which often end badly. A movie theater operator like AMC had no expertise in gold and silver mining, especially with a defunct operation like Hycroft lacking completed feasibility studies. The investment diverted resources from AMC’s ailing core business in an industry that has yet to recover, resulting in tens of millions in lost profits.
AMC should never have invested in Hycroft in the first place, and its botched, early sale means long-suffering investors lost out on a chance to realize substantial value being created.
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