What is Going on with AMC’s Preferred Equity (APE)?

AMC’s Preferred Equity (NYSE:APE) is up +50% this year-to-date after coming down more than -70% in the past year.

Talks have surfaced about a possible conversion of APE shares back to AMC Entertainment (NYSE:AMC) common stock.

APE served as a liquidity tool to supply the movie theatre chain with the capital necessary to pay down its debt and raise cash for the business.

In October 2022, AMC reduced its debt load by $106 million and has extended its maturities until the year 2027.

The company capitalized on APE to cut some debt off the top before taking on new debt due in five years from now.

AMC has replaced $506 million due in 2023 with $400 million of new debt due in 2027.

The updated balance sheet is going to ensure the movie theatre chain company is able to grow while it slowly pays off its debt.

AMC Entertainment has reported positive earnings reports since 2021 when shareholders rescued the company from bankruptcy.

Today, it’s about maintaining that momentum to ensure the short thesis eventually changes.

Will APE Shares Go Up?

AMC’s Preferred Equity (APE) is up 50% this year-to-date.

The equity saw massive buying volume in the beginning of the new year which led to a great head start this year.

This type of buying pressure will continue to drive APE shares up in the future, that is unless majority of shareholders decide not to convert the equity into common shares of AMC stock.

Today, APE is trading around $1.80 and is up +2% in the past five trading days.

The equity had been named one of the most heavily shorted stock by Yahoo Finance in December of 2022, but the short interest has dropped to 5.40% (updated daily).

While there are still short sellers betting against the equity, AMC Entertainment has warned both retail investors of possible and significant losses due to volatility and the possibility of a short squeeze.

Are you holding shares of AMC’s Preferred Equity (APE)?

Leave your thoughts in the comment section of the blog below.

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