Typically, preferred equity has seniority over common equity with respect to dividends and in bankruptcy payouts. They had the same voting and economic rights as AMC common shares. In a stock split, the share count rises and the share price falls.
Aron has made it known that the company could exercise the right to sell the rest to raise cash. Credit Suisse, Roth Mkm, and Citigroup analysts are less positive. On September 1, Credit Suisse easymarket review lowered its price target on AMC to $8 from $8.38. Roth Mkm and Citigroup both recently reiterated their sell ratings on the company, and Citigroup dropped its price target to $1.55.
I already had this trade, but sized it very small because of the short-squeeze history with AMC. I already owned some AMC June 25′ debt with a coupon of 5.75%. I also sold AMC (now combined AMC/APE called AMC1) puts when volatility was high in the past.
AMC stock plunges amid $APE debut, Cineworld troubles
Following the news of Nvidia’s investment, SoundHound AI stock rocketed higher — the stock gained 347% in the month of February. AMC’s stock ended Thursday’s session down 26.7%, extending their losing streak to four days. On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. AMC Entertainment is officially going “APE” in an effort to further solidify its financial future as its primary rival Cineworld says it’s exploring a bankruptcy.
Historical or hypothetical performance results are presented for illustrative purposes only. AMC has been on a roller-coaster ride over the past few years that took it from a beleaguered pandemic victim to meme-stock phenomenon. AMC used the steep rise in its share price to tap into equity and debt markets, raising $917 million in January 2021. Aron wrote in a tweet the company’s new APE units will allow it to “raise capital, pay debt,” and more. That could potentially be enough to keep it afloat while competitors tease bankruptcy. “With the creation of APEs, AMC is deeply and fundamentally strengthening our company,” Aron said in a separate shareholder letter issued Thursday.
- On September 6, AMC announced its intention to sell 40 million more common shares.
- The company essentially rolled what was formerly 1 billion shares of APE into the AMC share count.
- Stock splits and reverse stock splits redistribute a company’s value across a greater or fewer number of shares.
- The APE issuance was met with a boatload of confusion and its first day trading was all over the place with a 100% trading range off the low price.
AMC Entertainment (AMC) has fully embraced its meme popularity with the release of a special dividend called “APE” units. The AMC Entertainment Holdings Preferred Equity Units (APE) were dividended at the end of last week to AMC shareholders and have already risen nearly 10% from their $6 opening price. A document from AMC about the offering says that the APE dividend is not expected to be a taxable event for U.S. investors.
AMC issued APE stock FAQ:
The recent capital moves and the surprise $0.01 diluted EPS reported in the second quarter of 2023 may simply be too little, too late for AMC. Although these moves were activtrades review part of AMC’s plan to avoid bankruptcy, investors have not responded well. AMC was trading in the $2 range before the split and went to about $16 just after the split.
The stock price then dipped below $11 after the APE conversion. Such information is time sensitive and subject to change based on market conditions and other factors. You assume full responsibility for any trading decisions you make based upon the market data provided, and Public is not liable coinjar review for any loss caused directly or indirectly by your use of such information. Market data is provided solely for informational and/or educational purposes only. It is not intended as a recommendation and does not represent a solicitation or an offer to buy or sell any particular security.
I’m not quite sure how these are going to work out in this situation. While there have been some big movie hits this year, and studios are signaling a pullback from streaming-only releases, the U.S. box office remains well below its pre-pandemic levels. Rival Cineworld, which owns the Regal Cinemas chain, said Monday that it is considering filing for bankruptcy. AMC Entertainment has embarked on a meme-friendly experiment to give a token reward to its retail investor base while also creating a backdoor way to raise more cash down the line. Prior to that transaction, AMC had not split its stock, either positively or negatively, since it listed on the NYSE in 2013. The exact rebate will depend on the specifics of each transaction and will be previewed for you prior to submitting each trade.
Time to Upgrade!
However, the AMC Board currently has only authorized the equivalent of 1 billion of these AMC Preferred Equity units that can be issued now. 516,820,595 of these 1 billion AMC Preferred Equity units are being issued this month to shareholders as a dividend. There have been other bubbles in the past, from tulip mania in the 1600s, Britain’s South Sea bubble in the 1700s on through the dot.com and real estate housing bubbles of this century. Right now, we have a continuing bubble in fixed income securities, with $14 trillion of negative yielding government debt, as well as this meme stock bubble. I listened to AMC’s first quarter investor call where Adam Aron, the CEO, talked about how investor relations weren’t a big deal in the past. Now, he said he has 3.2 million retail shareholders who own 80% of AMC so he’s taken to Twitter to communicate with them.
The reason it didn’t just issue more common shares is that the company would have to get approval from its shareholders, which shareholders already shot down. Instead, the firm found a workaround to sell billions of dollars worth of shares without needing shareholder approval in an effort to capitalize on the extreme hype AMC has received from meme investors. On September 6, AMC announced its intention to sell 40 million more common shares. The company will again use the proceeds to repay debt and improve its cash position. Shares of AMC Entertainment Holdings Inc. rose 2% in premarket trades Friday amid the movie-theater chain and meme-stock darling’s reverse 1-for-10 split of common stock and AMC Preferred Equity unit stock conversion.
The special dividend seems to be in keeping with CEO Adam Aron’s aggressive marketing efforts to appeal to the retail investors who call themselves “Apes” and have rallied around AMC over the past year and a half. They characterize AMC as a value trap, arguing that there’s no fundamental improvement in the business. The company has struggled to generate profits for years, even before the pandemic shuttered movie theaters.
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And its stock has climbed 316% in the last five years, crushing the returns of the Nasdaq Composite index. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Considering that industry research sees the market for voice-recognition technology reaching $50 billion by the end of the decade, it appears to be early innings for SoundHound AI. While the stock has some momentum pushing it higher right now, this little-known AI company could emerge as a big winner in the long run. But most recently, semiconductor manufacturer Nvidia revealed that it has built a small stake in voice-recognition software developer SoundHound AI (SOUN -18.67%).
Now, the class has officially begun trading, but it won’t be seeing immediate success due to the stock’s current volatility. The stock surge at the time helped the company strengthen its financial position, as executives seized the opportunity to sell shares and repurchase debt. But with stock in AMC having come back down to earth in value, the exhibition giant has been hard-pressed to keep raising fresh cash to run its business.
