AMC announces massive share sale and its stock plummets

AMC Theaters


IMPORTANT POINTS:

  • AMC plans to sell up to 40 million shares, causing its stock to plummet.
  • The company has tried to reinvent itself in the streaming era.
  • AMC has had recent highlights, like the premiere of “Barbenheimer” and the Taylor Swift concert announcement.

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AMC Entertainment, a well-known movie theater chain, experienced a resounding drop of more than 20% in its stock on Wednesday morning. This reaction came after the company’s announcement of its intention to sell up to 40 million shares.

As reported by the company, the objective of this massive sale is to “strengthen liquidity, repay, refinance, redeem or buy back its existing debt”, and for general corporate purposes.

On the other hand, investors were already anticipating this share sale, especially after the agreement was approved by the court last month. The agreement allowed the company to convert AMC’s special preferred shares, known as units (APEs), into AMC common stock.

Adam Aron, CEO of the company, shared his optimism about the future of the company in a letter to investors. He stated: “AMC should now be able to raise additional equity capital. ” In addition, it should be remembered that AMC’s shares underwent a 10-for-1 reverse split in August, prior to the aforementioned conversion.

Also known as one of the original “meme” stocks, AMC has enjoyed strong support from retail investors since 2021. However, the company faced challenges during the pandemic lockdowns. Despite this, it has tried to reinvent itself as more than just a traditional movie theater chain in this era of home-streaming video.

Last Thursday, AMC’s stock rose as much as 9% after the company announced a screening of Taylor Swift’s “Eras Tour” filmed concert, which will begin on October 13.

In July, AMC experienced an exceptional opening weekend with “Barbenheimer”, a double combination of “Barbie” and “Oppenheimer”, resulting in the best single-day performance since before the pandemic.

AMC’s recent performance in the last quarter showed revenue of $1.35 billion, beating analyst projections of $1.29 billion. In addition, the company’s earnings per share came in at $0.00, beating analyst expectations of a loss of $0.04 per share.