AMC Reverse Stock Split on Hold Until After Lawsuit Clears
Shareholders have approved an AMC reverse stock split as well as the conversion of APE equity to common AMC stock, but CEO Adam Aron says they cannot implement the proposals until the Delaware lawsuit clears.
“Today was a huge step forward for AMC. You voted YES, YES & YES! And it was a landslide vote too — 88% yes for Proposal 1, 87% yes for Proposal 2, and 87% yes for Proposal 3. My sincerest thanks for giving AMC the tools we need to continue fighting the good fight on your behalf.
Saving AMC is my professional mission. And remember that I own millions of AMC shares and APE units too. So, I very much want for AMC to succeed. I am absolutely and passionately convinced that what you approved today is in the best interests of AMC and of all our shareholders.
So what happens now? We can not implement what you approved today until the litigation in Delaware courts is resolved. The next Court hearing on this matter is set for April 27, 2023. We will update stockholders when we have additional information.”
The 1-for-10 reverse stock split will divide shares by 10 and multiple AMC’s share price by 10.
For example, with AMC’s current share price today at $4.60, the stock price will reflect $46 but shareholders holding 100 shares will now hold 10 shares.
Investors holding 1,000 shares of AMC stock will hold 100 shares after the reverse split.
Allegheny County Employees’ Retirement System filed a lawsuit against AMC Entertainment (NYSE:AMC) claiming that the company and several of its directors violated state law to “eviscerate” the voting power of common stockholders, who had not supported issuing new shares.
The Purpose Behind a Reverse Stock Split
AMC Entertainment, while it’s improved drastically over the past two years, continues to burn cash.
Developments such as AMC Perfectly Popcorn and branded merchandise are just two innovations the company has created to increase revenue.
While the developments are still new, AMC needs big cash quick, which is why a reverse stock split and APE merge was proposed.
An AMC and APE merge will combine the value of both the equity and common stock of the company.
A reverse stock split will buy the company time and stay listed on the NYSE as short sellers continue to drive shares down — this time from a higher share price than current levels.
The approved proposals will dilute the stock by increasing the number of shares from 524,173,073 to 550,000,000.
This gives AMC Entertainment millions of shares to liquidate as soon as they hit the market, allowing the company to raise big cash once again.
However, the reverse stock split now makes it 10 times more challenging for shareholders who got in at the peak of 2021 to break even.
Shareholders will have to repurchase 10 times their shares to be unaffected by this type of dilution.
This repurchase may have the potential to move stocks up, but at a hefty cost.
Related: AMC Stock: CEO is Tired of Manipulation Talks
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Show CommentsHey Eric I’m getting a funny feeling that you work for AMC, I bet your shares this stock is going to cave after the reversal split.
I cannot think that someone would vote yes, against oneself, AA has only thought of his benefit, we retail investors are nothing to him, he has played with us as he pleased, among short sellers and AA have screwed us, I go back and repeat how someone thinks of voting yes, this seems like a joke and in very bad taste, what a great disappointment !!!!!!
Wrong
Any investor would vote no as you will lose 9 tenths of your stock. I’ve had so many reverse splits and they all just took your money. My question is who would vote yes?
A RS is willingly giving your entire portfolio to the company to use at their discretion. I’m not sure if investors truly know this..
Eventually the price will come back down to current levels, but shareholders will have less shares and portfolios will be valued significantly lower by then. This gives short sellers more ammo to make money on the way down from a RS at $30, $40, $50, $60, etc.
🍿I do not agree with that statement you made Frank…. Because it just isn’t true….. And with all you know, it kind of raises a red flag 🚩….. All factors involved $AMC will never go back down to current numbers, especially with new revenue streams and the market cap…. No way…
And you thinks shorts will keep going? Are you flipping too Frank?
Say you haven’t went the route of a shill like xxxmarinexxx…
Especially with the “giving your entire portfolio to the company to use at their discretion” bullshit…… Explain that to me, because that is something that completely doesn’t make sense… 🤔 😐 😒 🙄
You ABSOLUTELY know what you just said was all bullshit….
What are you doing?
Please explain……
I mean, you kinda need to explain… because this is concerning…
$AMC $APE #CHECKMATE
Woah dude. No BS here. Let’s please act like the adults we are.
Everything stated makes absolutely 100% sense. But of course that’s just my logical reasoning behind what’s happening.
Anyone can think like I do, or like you do, and it doesn’t mean you’re right or wrong, nor does it mean I’m right or wrong.
If you don’t think numbers will go back down to current levels, that’s cool, just say that — but let’s not start using irrelevant terms just because you disagree.
There are two investors, the one that can logically and respectfully disagree, and the one that melts at the first sight of conflicting perspectives and begins to use irrelevant and irrational terms.
We get to choose which one we want to be.
If you’ve read my other articles, you know that any short closing will trigger massive price action — doesn’t mean this isn’t relevant with a RS, it’s just more challenging because (in my opinion) it’s more expensive for buyers to buy, but also gives short sellers room to profit as prices come down from time to time again.
Yes, a RS hands your capital out to the company, just like APE did, but in a different type of dilution — that’s not an opinion; if you have 1,000 shares, you will have 100 shares in a RS. The risk becomes more present when shares come back down.
A RS exchanges your multiplier (number of shares/capital) for time (bigger share price, smaller multiplier factor). It’s a different type of exchange for the value/portion of your portfolio.
The value will remain the same, say at $30-$40, wherever AMC trades, BUT as soon as pricing begins to come down to current levels (or lower) — because we’ve seen it before, those shares will be worth significantly less post a RS.
Ex. (Reverse Split)
1,000 shares @ $4.60 = $4,600
100 shares @ $46 = $4,600
*They’re the same – but what happens to the value of those 100 share when the price gets shorted to current levels?
Ex. (Shares coming back down to $4.60)
Again, just an example since we’ve seen shares come down from $72 to below $4.
(No Split) 1,000 shares at $4.60 = $4,600
(Reverse Split) 100 shares at $4.60 = $460
This is a scenario where say market makers are able to drive shares back to current levels. And you can disagree if you don’t think shares will come back down to current levels, that’s okay. Logically, the probability of investors buying the stock at $30 or $40 is much less likely than investors buying the stock at current levels.
A reverse stock split buys the company time to continue crushing it fundamentally. And that’s my opinion based on the case study above.
Everyone does as they please with their money. This article is not telling you what to do with it, it’s only highlighting what I just explained above — a risk factor if you will.
My articles have put many of my readers in serious profits in early plays, including AMC (2021). These are just updates as the years go on. I have nothing to gain with you buying or selling your stock, I don’t care what you do with your hard earned money. These articles are meant to provide perspective, value, and to help investors navigate the changing market environments. What you do is 100% up to you, no judgement.
You have no idea what you are talking about T…….
Same old crap from you losers….. crying like beeeeotches
This news is devastating especially for investors who bought at $55 last year. Stock must reach $550 per share to break even, Adam Aron never should have tabled this vote. Watch as these shares drop back to $5.00.
Adam Aaron is a thief he only cares about himself and his top 1% buddies
It’s going to be a bloodbath because short sellers will be able to bring the price down from a higher level, making more money while shareholder portfolios keep getting drained. By the time shares drop back to $5, investors will have 10 times less the shares they previously did. The RS basically converts equity into time for the company, leaving investors with only 1/9th of their life-investment in AMC.
The shares never be back to the price of your mom on a Friday night behind the local PizzaHut again…. Okay Howard… It blows me away how hard this is to understand….
Listen, only like 10 to 15%, lets just say 20% of shareholders voted no… Those people are absolutely retarded and have no understanding of this kind of shit or they are completely brainwashed.. As far as Im concerned, SEE YA.. .. $APES don’t need you or your lies and FUD Howard… kick rocks or stfu….
Eric Frank is right. I have been in the stock market since 1996 in stock splits has never been good. Aaron is just out to get your money. What’s bullshit is the fact that they implemented number three which is they will vote on our behalf how about all those people who didn’t get their stock proxies to vote I was one of them. AMC won’t even return emails or even pick up their phones. My bank said here in Canada stated that a lot of people did not get their proxy papers. So then the company AMC vote on customers that didn’t vote sure why not and put down yes for everything. How could that be 87% voted yes when probably 41 did not receive their papers according to what I’ve been reading on the Internet. What a bloody bloodshed. I hope the court action goes on forever.
Write to judge Morgan Zurn (female) of the Court of Chancery and make them aware you, and that your bank stated others never received their proxy.
https://www.docketalarm.com/cases/Delaware_State_Court_of_Chancery/2023-0215/IN_RE_AMC_ENTERTAINMENT_HOLDINGS_INC._STOCKHOLDER_LITIGATION/
Also, only 35% AMC shareholders voted. 100% APE shareholders voted. And the majority of APE shares are owned by Adam Aron and Antara Capital—who has started selling even more APES after the vote results announced on Tuesday (see SEC filings in EDGAR). Such a MANIPULATED voting process. I hope the Judge sees this manipulation when she receives the vote results.
You’re so right
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