APE shares rose more than 75% on Thursday.
Volume skyrocketed past 177.6 million, up 158 million in trading volume from its average of 19.6 million.
Shares rose from $0.67 its previous closing day to $1.20.
The equity is currently up 5% after hours.
So, what happened?
And can we expect APE shares to continue rising?
Let’s discuss it.
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The Latest on APE Stock
APE stock (AMC’s Preferred Equity) has been the topic highlight since its inception earlier this summer.
AMC Entertainment was able to raise several million dollars from the equity to pay down its debt.
The price of the equity has since come down drastically as short sellers piled in forcing share prices to a low of $0.65.
And just as the possibility of the equity merging with AMC is announced, APE share surge more than 75% reaching $1.20.
CEO Adam Aron announced on Twitter today that there will be a shareholder vote to convert APE equity to AMC common shares.
He also commented on the possibility of a 1-for-10 reversal stock split for AMC stock.
It’s the biggest news in the AMC community thus far.
So, why did APE shares rise so much today?
And where did so much trading volume come from?
Retail investors are speculating insider buying triggered the massive price surge and heavy volume.
Others are alleging it’s the company’s way of injecting value back into the equity before APE re-merges with AMC common stock.
The truth is, it’s hard to say.
APE was never intended to be a valuable asset for investors, but more so a valuable asset for AMC Entertainment as a company.
Will APE Shares Keep Rising?
If insiders are injecting the equity with value before shareholders vote for the merge of APE and AMC, then it’s very possible the equity may continue to rise.
As of right now, where the immense amount of volume came from is undetermined.
What’s certain is many shareholders weren’t too happy about the creation of APE in the first place as it created unnecessary loss for shareholders.
Here are the CEO’s comments published on Twitter:
“Also, APEs worked exactly as intended to let us raise needed cash, buy back debt, explore M&A. But a huge discount in APE market price vs common stock must be addressed. We’ll hold a shareholder vote. It’s time to convert APE preferred into AMC common to eliminate that discount.”
APE shares have been massively shorted to cents, AMC stock is now trading below $5, a solution has to be addressed.
And so it has.
Adam Aron is proposing a 1-for-10 reversal stock split where shareholders will get left with 1 share of AMC for every 10 shares they hold in exchange for a higher share price.
The idea is to give shareholders the illusion of a higher share price by reducing the number of shares they hold.
The value of an individual’s portfolio would remain the same amount.
However, if an investor holds 10 shares of AMC, they will convert to 1 share.
If an investor holds 100 shares of AMC, after a 1-for-10 reverse split they will hold 10 shares.
All for the sake of making the value of AMC shares appear much higher.
With AMC currently trading around $4.50, a 1-for-10 reverse stock split would mean the stock will then trade at $45 per share.
Leave your thoughts below
I’m curious to hear your thoughts on what’s currently occurring with AMC Entertainment and its APE shares.
How do you feel about the entire situation at hand?
Leave your thoughts below for the community to see.
Related: Adam Aron Address Falling APE Shares