AMC Entertainment is selling 425 million APE shares according to the movie theatre chain’s recent Form 8-K filings.
CEO Adam Aron advised investors AMC’s Preferred Equity (APE) would provide the company with additional capital to pay down debt at some point during its inception.
I anticipated the company would begin selling shares sometime in Q4 to end the year strong with cash and lower debt.
Alas, AMC Entertainment is doing just that.
“Under the circumstances, we caution you against investing in our AMC Preferred Equity Units, unless you are prepared to incur the risk of losing all or a substantial portion of your investment,” said an official statement from AMC Entertainment.
Let’s discuss it below.
Welcome to Franknez.com – if you haven’t joined the newsletter, be sure to do that below. I’m publishing market news and updates daily.
Let’s dive right into it!
Join the newsletter to become part of an activist group fighting for market transparency!
Receive weekly market news and articles like this to stay up to date.
AMC is on Track for Fundamental Growth
The largest movie theatre chain in the world is about to take a leap forward as the company prepares to capitalize from APE.
APE saw gains more than +6% on Monday while AMC was down more than -10%.
Both stocks are seeing some recovery on Tuesday.
On Twitter, shareholders are anticipating a short squeeze, or rally prior to the massive sell.
Afterall, the selloff means APE share prices will fall, but AMC could capitalize on $1.5 billion at current share price levels.
Had the movie theatre chain sold APE during its inception, the company would have enough capital to erase all of its debt.
The company pivoted towards the issuance of APE when shareholders refused to approve the dilution of more AMC shares.
The only solution was to split AMC shares, allowing the company to use its shareholders capital as a cash cow to raise cash without the approval to do so.
And while it’s not 100% confirmed how many shares will be sold, AMC Entertainment does state up to 425 million APE shares may be sold.
Should You Invest in APE?
AMC Entertainment made the following statement:
“Under the circumstances, we caution you against investing in our AMC Preferred Equity Units, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.”
The company warns investors of the significant losses that may occur due to the upcoming selloff.
Conversations have even circulated on Twitter about the possibility of APE getting delisted.
And while the delisting of APE might sound rather extreme, investors should be mindful of how their capital is working for them, if at all.
APE has always been a tool for the company’s fundamental growth rather than an investment tool for retail investors.
Nonetheless, selling APE is going to push AMC forward fundamentally as the movie theatre chain reduces its debt and continues work on increasing its revenue.
I’m curious to know what you think.
Leave your thoughts in the comment section down below.
You Can Follow Me On: Twitter | Facebook | Instagram
About The Author
Lol I guess everyone out here forgets the reason why ape n AMC drop it’s manipulation illegal manipulation there is no sell off I don’t give a shit if the market is red is plain as day what Ken Griffin is doing it’s so obvious it’s not even funny
I hope they drop ape to 1 then convert over to AMC then what ape will never get delisted n I don’t believe anyone from AMC said anything about that or about possibly losing yr money if so show me the proof
There may be something to just stop buying and just hold
Bang on buddy i feel the same way
The only play is to be patient. You haven’t truly lost all the money missing from your accounts, not unless you panic sell to save what’s left. If this move works, AMC may be completely debt free. This creates a much better situation not just for the company, but every shareholder of APE and AMC here for the life-changing cash. If you’re still not convinced, theres only one play left- every Ape around the world chooses going to the movies, bringing along all their money-spending friends, over other fun things they like to do- until AMC makes enough money from theatre revenue to pay off the debt. LoL I’m just an enthusiastic APE, NOT A FINANCIAL ADVISOR. But sometimes I can predict the future. Like when a fart is coming.
Ape can be sold into the market at the price negotiated between buyer and seller not market price. AA could drop them for $10 even if the price is higher or lower at the moment from what I understood.
@ jlarsen5860 , You are correct a lot of Ape retailers are not going to be happy ,I can’t see how Adam dumping 435 million more shares can do anythingbut hurt the price of Ape . Again if you are here for the long long term it wilhelpthe company. What you failed to mention is that Ape took approximatley 38% of the price away from AMC this is per Amertraide calculation of what Ape came out at. So with Ape getting ready to get smashed
there goes 38% of AMC price we were at before Ape, It is good you are smart enough to realize this will be and you may be absoutletly correct a 5 year play before we see any real
profits unless you were around and smart enought to get in way back when AMC was at $2.00, you willbe fine . I wasn’t . .
I’ve totally ignored $APE. Continued buying smaller quantities of $AMC. We knew this could happen. Some may not have known of the outcomes. Still believe in $AMC squeeze as it remains in my 5-year portfolio. But the preferred shares will likely just sit while I get a better handle on @adamaron strategy. I’m certain his thinking is about the health of $AMC, and that’s a good thing. I don’t believe that some retail traders are going to enjoy the $APE outcome. Again, we shall see.
UNFORTUNALTLEY for me I got into this nightmare in the 50’s
Needless to say I am getting KILLED. Ape for me has turned out to
Be a POUNCE alright in the wrong direction . AMC was around 19
When this crap came out , Look at where we are now maybe $10.00
And change. And now with his adding more APE It is called dilution.
When has dilution ever been good for Retail, if Ape could not go up
on its own when it came Out (It has gone Straight Down) I can’t see anything
but more RED coming From the addition of 425 million more shares.
(Let’s not kid ourselves that’s The number) I am hoping one of your followers
or you can show me what I am Missing. I want to be wrong. I am shaking my head
this man Adam has a knack of just when things are starting to look good.
He kills it , think back to June we were in the 30’s and Bam here comes Adam
Dumps a bunch I think 300,000 personal stock on market , he did extremely well
What happen to us? The stock started tanking again. This POUNCE words from Adam
Are not working for us , unless you are a REALLY long and I mean years of long holding
This dilution is not good. Please show me what I am missing. Sorry for venting
But I needed to get this out , it is destroying me, I am sure I am not the only one depressed.
I have full faith that AA knows exactly what he’s doing. The dilution comes with certain contingencies where Citibank would have to pay up front for these additional shares. This makes certain they aren’t being distributed in an illegal or naked manner. That said, dilution has actually had a positive impact on AMC. Every time its been diluted, the share price soared. Look back to January and June 2021. This is because the institutions cause buying pressure on the limited float being issued. If this does in fact happen, APE would allow AMC to payoff debt, which would increase fundamental value completely demolishing the short thesis. Aside from that, we need to stick to our convictions and remember the entire reason we got into this was for a squeeze play. All the pieces are there. Patience will lead us to victory. Buy and HODL.
Hahaha…..dilution has a positive impact on stock price?
Each time AA sold stock , it was a sunny day. Adam Aaron must make sunny days!!!
I’m cautions about buying more Ape , not sure if it will cause a short squeeze bc of all the synthetics still out there , I’m happy with I’m initial ape shares , so I’m holding and just watching
Mike
Let’s start a discussion! Leave your thoughts below.
We need to stop buying shares and HODL only, when we buy shares the money goes to Citadel since its the Market Maker and gives them money to drag this out longer, if we hold only then they are the ones buying them and recycling their money
Fud!