AMC shares crater as investors brace for stock conversion

In a Form 8-K filed with the SEC last week, AMC explained that the reverse stock split is expected to occur on Aug. 24, which is also the record date set for a litigation-settlement payment as of close of business that day. Conversion of APEs into AMC common stock is expected to occur on Aug. 25, with the APEs ceasing trading that day and subsequently being delisted from the New York Stock Exchange. These preferred equity units are a workaround, of sorts, and free AMC up to sell additional units of stock after investors who feared dilution rejected the company’s efforts to issue additional stock last year. AMC raised billions during the Covid pandemic selling new stock, which aided the company in paying off its debts and staved off bankruptcy during a time when movie theaters were closed or had limited product to screen to audiences. Earlier this month AMC’s revised stock-conversion plan was approved by the Delaware Chancery Court.

As of December 31st, there was short interest totaling 23,280,000 shares, an increase of 27.2% from the December 15th total of 18,300,000 shares. Based on an average daily volume of 20,350,000 shares, the days-to-cover ratio is currently 1.1 days. AMC Entertainment’s stock was trading at $6.12 at the beginning of 2024.

  1. At $435.3 million for the second quarter, that’s down 12% year over year and has plummeted 75% in the last two years.
  2. It’s all being fought to pay off some of AMC’s considerable debt mountain, which Bloomberg puts the figure at $9.5 billion.
  3. That hasn’t helped the share price recover, nor does it look set to do so anytime soon if AMC plans more share sales.
  4. The number of shares owned by shareholders was adjusted after the market closes on Wednesday, August 23rd 2023.
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AMC’s movies industry group shows an improved ranking lately, at No. 33 among IBD’s 197 industry groups in terms of six-month price-weighted performance. The group had risen to as high as 20th during the summer of last year. The 33% gain in October was pleasant to see, but AMC stock gave back all of that rebound in November. Going beyond the fundamentals, growth investors benefit in a big way if they understand how well a stock performs vs. a key benchmark. As for AMC stock, IBD’s relative strength line, which graphs a stock or ETF’s day-to-day performance vs. the S&P 500, has plunged since Aug. 14. This means AMC has sharply underperformed the S&P 500, especially since mid-August.


But shares likely plunged on the dilution effect that the conversion brings. AMC Entertainment Holdings Inc AMC shares are trading higher by roughly 2.6% to $9.61 Friday morning. The company on Friday announced that it will report its results for the third quarter ended September 30, after the market closes on Wednesday, November 8. The stock may be also be volatile following recent momentum in anticipation of the debut of the Taylor Swift Eras Tour concert film. This news follows AMC’s closing of its $350 million at-the-market (ATM) offering earlier this month. AMC raised the capital through the sale of approximately 48 million shares.

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They did the same in a band of other companies that had been heavily sold short and struggling. According to newly updated data on a MarketSmith chart, the stock now holds a revised float of 196.4 million freely traded shares. Ahead of the offering, the company showed 158.4 million shares outstanding. A new share offering can dilute the stock; according to MarketSmith, AMC now has 198.4 million shares outstanding.

Key Data

According to MarketSmith, short interest — shares sold short by individual and professional investors — has rebounded to 24.8 million shares, or nearly 13% of the stock’s newly revised float of 196.4 million shares. Volume skyrocketed to 84.9 million shares during the Sept. 6 sell-off — a clear sign that institutions unloaded shares. Turnover jumped to the highest amount so far this year and almost eight times the stock’s average turnover over the past 50 sessions.

AMC Entertainment’s stock is owned by many different retail and institutional investors. Today, the chain is home to all of the top movies and offers attractions like IMA, Dolby Surround Sound, PRIME, 3-D features, Plush Power Recliners, and Dreamscape as well as full restaurants in many locations. In addition to entertainment, AMC Entertainment has a number of options for businesses and organizations that include big-screen supported meetings and events.

The company issued the preferred APE shares as part of a strategy to change its corporate voting structure and get shareholder approval to sell additional common stock. AMC was widely expected to sell additional shares after the successful conversion is avatrade trustworthy of the preferred APE shares into AMC common stock in August. The units had only been publicly traded on the New York Stock Exchange for a year, and the conversion only went ahead after a settlement was reached with its shareholders.

That attitude helped AMC survive the pandemic, but now, investors have had enough. AMC also is planning a 10-to-1 reverse stock split of its common stock on Thursday. AMC’s 2023 decline is primarily attributed to a strategic move made by the company in August, which involved implementing a 10-to-1 reverse stock split. Additionally, during the same period, the company’s AMC Preferred Equity Units, previously traded as APE, were converted into common stock.

Things are looking up for AMC after a strong quarter ahead of the summer blockbuster, which should be reflected in its Q3 results later this year. But the company would prefer to risk the wrath of Wall Street than stop its plans to sell shares to raise some much-needed cash to fix its liquidity problems. If anyone thinks AMC wants to get into a litigation fight with its shareholders over conversion plans and stock sales for fun, they’re wrong. It’s all being fought to pay off some of AMC’s considerable debt mountain, which Bloomberg puts the figure at $9.5 billion. The cinema has previously used the now-defunct APE shares to pay off $548 million in debt.

AMC had previously collaborated with “top confectioners” for over a year in order to create its chocolates. In December, AMC also completed its latest at-the-market equity offering, raising approximately $350 million. Current projections from Wold show AMC is unlikely to move into positive free cash flow territory until 2025, so having additional liquidity is necessary for the company’s immediate future. Upgrade to MarketBeat All Access to add more stocks to your watchlist. Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams.

And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data. Meanwhile, mutual funds owning a piece of AMC stock have dropped from 686 at the end of 2021 to as low as 259 as of the end of the fourth quarter, according to MarketSmith. They include an improved 71 Earnings Per Share Rating on a scale of 1 to 99, up sharply from 23 in recent months. AMC’s ratings in IBD Stock Checkup are still showing extremely bearish tints.

The previous record-low stock price close was $10.73, seen in January 2021, with Wednesday’s close considerably under that. The company converted AMC Preferred Equity units, or APEs, into common shares. AMC CEO Adam Aron described the court’s approval as a “significant milestone” in a letter to investors earlier this month. “Knowing that we can do our best for AMC to smartly raise capital is a terrific relief,” Aron said. Strong future profits could lead to increasing accumulation by large funds and other institutional investors. A powerful rebound could force short sellers to cover their positions, helping to propel shares even higher.

AMC’s plan to convert its APEs to common stock was blocked last month when Delaware Chancery Court Judge Morgan Zurn rejected a settlement that would have allowed the deal to proceed. The stock-conversion plan is part of the movie-theater chain and meme-stock darling’s ongoing battle to eliminate debt. 6 brokers have issued 12-month price targets for AMC Entertainment’s shares. On average, they expect the company’s share price to reach $9.75 in the next twelve months.