AMC's meme stock sales near full valuation

AMC’s meme stock sales near full valuation

AMC Entertainment Holdings Inc. is selling another $110 million in stock, adding to a total that has already topped $2 billion since the movie chain was swept up in the meme-stock craze and swooned. is approximated to the total market capitalization of the stock.

AMC AMC Shares,
fell 22% on Thursday, hitting its lowest intraday prices since March 2021, after the company announced plans for its latest capital raise. Executives also said they hope to arrange a shareholder vote on a 1-for-10 reverse stock split on AMC common stock, as well as a proposal to increase the authorized number of AMC common stock to allow the conversion of the preferred shares of AMC – or APE. MONKEY,
a reference to the nickname of retail traders in the universe of stocks of memes – in common stocks.

The price of AMC’s APE units jumped 75.2% to $1.20 on Thursday. AMC shares closed 7.4% lower at $4.91.

Even before the $110 million capital raise announced Thursday, AMC had sold $2.04 billion worth of stock since the start of 2021 and the dawn of the stock meme era that launched the movie theater chain. , GameStop Corp. EMG,
and others in the stratosphere.

See also: What can we expect from AMC, GameStop and Bed Bath & Beyond meme stocks in 2023?

This total does not include the $159.1 million in stock sales that took place in the fourth quarter of 2020, before the shares began to climb in January 2021. Including sales with others made since the beginning of 2021 – $1.611 billion in common stock offerings and $425 million in convertible stock – and adding the figure from Thursday’s announcement, would bring the total even closer to AMC’s total market capitalization. The company’s market capitalization was $2.56 billion as of Thursday’s close, according to Dow Jones Market Data.

AMC raises $110 million through the sale of millions of APE units to Antara Capital, which also holds AMC’s debt. Antara will also swap $100 million of debt maturing in 2026 for approximately 90 million APE units. This swap, AMC said, would reduce AMC’s outstanding debt by $100 million.

General Manager Adam Aron said on Twitter that the move put the theater chain “in a much stronger cash position.”

Aron tried to find ways to increase AMC’s stock count and sell more stock — a move the company resorted to after pandemic-related shutdowns left the movie industry under respiratory assistance. After investors resisted calls to increase the number of shares allowed last year, Aron touted EPAs as a way to keep selling shares without increasing the number of shares.

Now, investors will be asked to vote to allow the AMC board to increase the number of shares so that the APEs can be converted into normal shares. They will also vote on whether to allow AMC to roll out a 1-to-10 stock split and give the company the right to sell more shares instead of just APE.

“Additionally, the EPAs worked exactly as intended to allow us to raise needed cash, buy back debt, explore M&A,” Aron continued on Twitter. “But a huge APE market price discount to common stock needs to be addressed. We will hold a shareholder vote. It’s time to convert preferred APE to common AMC to eliminate this discount.

See also: AMC thought about buying Cineworld theaters, but it came to nothing

He added that “a company as distinguished as AMC shouldn’t let Wall Streeters wish us ill at becoming a ‘penny stock.’ So, when voting by shareholders, you can also consider a 1:10 reverse stock split. A simple arithmetic, if approved, the number of shares decreases, therefore the price of the share increases.

So far this year, AMC stock is down 82%. The company hasn’t reported quarterly earnings since the start of the COVID-19 pandemic and has posted cumulative net losses of more than $6.5 billion since the start of 2020.

Analysts tracked by FactSet on average expect AMC’s revenue to hit its highest level since the start of the pandemic in the fourth quarter — $1.21 billion. But they still expect a loss of around $124 million over the period.

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