AMC’s Preferred Equity (APE stock) has made it available for the company to raise cash instantaneously.
The company announced in September it would sell up to 425 million APE shares to pay down their debt.
AMC Entertainment has steadily improved fundamentally since 2021 when retail investors injected the company with liquidity to squeeze short sellers.
The movie theatre chain has acquired several new theaters, entered the crypto and NFT space, and has beat every quarter for two years in a row now.
Despite what mainstream media has portrayed, retail investors have not ditched the pursuit of squeezing Wall Street again.
The massive retail community who participated in the trading activity which caused AMC and GameStop to rise are now looking to squeeze AMC’s Preferred Equity, APE stock.
How high can APE stock go?
Let’s discuss it.
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.
What is APE Stock?
APE stands for ‘AMC Preferred Equity’ and is a tradable security in the stock market deriving from an AMC stock split.
Retail investors who held or purchased AMC shares before the stock split would be granted with 1 APE share for every AMC share they held.
The stock split was marketed as a dividend which confused many shareholders at first.
Some retail investors weren’t too pleased to hear AMC’s share price would be divided evenly between AMC and APE stock, but others viewed the split as an opportunity.
The main purpose of APE stock was to allow the company to capitalize from its shareholders during a time of need.
AMC Entertainment would need approval from shareholders to dilute the stock and raise cash, but not with APE.
APE would act as a pool of liquidity for the company to pull money from.
How is APE’s Value Determined?
At first, APE’s value was divided in half from the close of AMC’s trading price prior to the stock split.
Both securities’ value has been determined by market conditions since.
This means how high APE stock goes will highly depend on how much buying power the security receives from retail and institutional investors.
But the market in general has been tough for most investors.
Today’s bear market has only set lower prices for both AMC Entertainment and APE stock.
It’s fair to predict that APE’s value will see more downside before a reversal.
AMC Entertainment made a statement warning short sellers of severe losses that may occur in a ‘short squeeze’ scenario.
An APE short squeeze triggered by coordinated trading activity would result in huge gains for retail investors going long.
But the debate whether APE can squeeze in the first place or not has become a subject few within the retail community half touched topic on.
What do you think?
Leave your thoughts in the comment section below.