“Despite a court ruling, AMC Stock Rises on the Blockbuster Debuts of ‘Barbie’ and ‘Openheimer'”
In a significant turn of events, AMC Entertainment Holdings’ (AMC) stock surged by 33% on Monday after the court denied AMC’s appeal to reverse its decision on converting AMC’s preferred equity shares (APE) into regular AMC shares. The theater chain also witnessed its busiest day in four years during the weekend.
According to the company, over 7.8 million moviegoers visited AMC-operated theaters during the opening weekend of “Barbie” and “Openheimer.” Moreover, Saturday marked the best single-day attendance since July 2019, surpassing even the revenue generated from food and beverage sales, the second-highest in history. The stock had been steadily rising since Friday after the Delaware court ruling stalled the share conversion, allowing shareholders to retain APE units instead of converting them into regular AMC shares as initially planned in March.
Alicia Reece, Vice President of Equity Research, noted in a statement on Monday that nearly 3,000 people sent letters to influence the court’s decision, likely concerned about potential weakness in share value. This stock rally comes amidst a challenging time for the movie theater industry due to the detrimental impact of the pandemic on theater attendance, with theater revenues still lagging behind the 2019 levels. Despite the uncertainty, AMC has shown confidence in raising capital by leveraging its meme stock branding.
However, despite the recent surge, AMC’s CEO Adam Aaron, in an open letter to investors on Sunday, emphasized the need for equity fundraising. He highlighted that raising equity capital is essential for safeguarding AMC’s shareholder value in the long term and ensuring financial stability.
AMC Stock Rallies 33% Following Court Ruling; Movie Theaters Witness Record Attendance
AMC Entertainment’s stock closed at $5.85 per share on Monday, marking a significant rebound after facing a series of declines, ultimately dropping by more than 70% earlier this year. Aaron’s direct appeal to investors underlines the importance of the company’s equity capital-raising situation. The recent surge in attendance was also buoyed by the release of blockbuster movies “Barbie” and “Openheimer,” which showed that well-crafted and well-marketed films can still attract substantial audiences in a single weekend, leading to great success for both films.
The court’s ruling against the stock conversion also signals a win for shareholders, with over 2,850 shareholders reaching out to the court to assert their rights in the matter.
Memes about stocks
AMC’s journey in the meme stock market began in 2021 when retail investors bought heavily shorted stocks that institutional investors had bet against. In June 2021, the stock reached an all-time high of $72.62, allowing the company to raise capital and avoid bankruptcy. Since then, the stock has experienced significant fluctuations and closed at $5.85 per share on Monday, nearly 23% lower than its peak earlier this year. Despite the volatility, AMC remains an interesting stock to watch in the market.
Overall, AMC’s recent surge in stock value and record attendance in theaters present a glimpse of hope for the company as it navigates through challenging times in the movie theater industry. However, the need for equity fundraising and the ongoing uncertainty in the film industry call for careful strategic planning and financial management in the coming years.
