{"id":13717,"date":"2023-08-22T18:26:02","date_gmt":"2023-08-22T18:26:02","guid":{"rendered":"https:\/\/isafespend.com\/news\/amc-shares-crater-as-investors-brace-for-stock-conversion\/"},"modified":"2023-08-22T18:26:04","modified_gmt":"2023-08-22T18:26:04","slug":"amc-shares-crater-as-investors-brace-for-stock-conversion","status":"publish","type":"post","link":"https:\/\/isafespend.com\/?p=13717","title":{"rendered":"AMC shares crater as investors brace for stock conversion"},"content":{"rendered":"<div id=\"RegularArticle-ArticleBody-5\" data-module=\"ArticleBody\" data-test=\"articleBody-2\" data-analytics=\"RegularArticle-articleBody-5-2\"><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"><\/span><\/p>\n<div class=\"group\">\n<p>AMC Entertainment shares plummeted more than 20% Tuesday, slipping to a new 52-week low of $2.46 per share, as investors brace for a stock conversion later this week.<\/p>\n<p>On Friday, the movie theater chain&#8217;s preferred equity units, dubbed APE shares, are set to be transformed into common stock just one year after they began trading on the New York Stock Exchange.<\/p>\n<p>These preferred equity units are a workaround, of sorts, and free AMC up to sell additional units of stock after investors who feared dilution rejected the company&#8217;s efforts to issue additional stock last year. AMC raised billions during the pandemic selling new stock, which aided the company in paying off its debts and staved off bankruptcy during a time when movie theaters were closed or had limited product to screen to audiences.<\/p>\n<p>AMC also is planning a 10-to-1 reverse stock split\u00a0of its common stock on Thursday. <\/p>\n<p>The company&#8217;s authorized share count will increase to 550 million from a prior post-reverse split count of 52.5 million, allowing AMC to issue more than 390 million shares, wrote Eric Handler, managing director at Roth MKM, in a research note published last week.<\/p>\n<p>The share upheaval follows significant back and forth: The movie theater chain was sued in February for allegedly rigging a shareholder vote that would allow it to convert preferred stock to common stock and issue hundreds of millions of new shares. A revised stockholder settlement, in response to that lawsuit, was approved by a Delaware judge last week. <\/p>\n<p>Shares of the company have nearly halved since it was announced on Aug. 14 that the APE shares would be converted.<\/p>\n<\/div>\n<div>\n<div class=\"Collapsible-proliveCollapsableContainer\" role=\"button\" tabindex=\"0\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"256\" height=\"256\" viewbox=\"0 0 256 256\" aria-labelledby=\"title desc\" role=\"img\" focusable=\"false\" preserveaspectratio=\"xMinYMin\" class=\"Collapsible-stockChartIcon\"><title>Stock Chart Icon<\/title><desc>Stock chart icon<\/desc><g transform=\"translate(1.4065934065934016 1.4065934065934016) scale(2.81 2.81)\"><path d=\"M 87.994 0 H 69.342 c -1.787 0 -2.682 2.16 -1.418 3.424 l 5.795 5.795 l -33.82 33.82 L 28.056 31.196 l -3.174 -3.174 c -1.074 -1.074 -2.815 -1.074 -3.889 0 L 0.805 48.209 c -1.074 1.074 -1.074 2.815 0 3.889 l 3.174 3.174 c 1.074 1.074 2.815 1.074 3.889 0 l 15.069 -15.069 l 14.994 14.994 c 1.074 1.074 2.815 1.074 3.889 0 l 1.614 -1.614 c 0.083 -0.066 0.17 -0.125 0.247 -0.202 l 37.1 -37.1 l 5.795 5.795 C 87.84 23.34 90 22.445 90 20.658 V 2.006 C 90 0.898 89.102 0 87.994 0 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"><\/path><path d=\"M 65.626 37.8 v 49.45 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 23.518 L 65.626 37.8 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"><\/path><path d=\"M 47.115 56.312 V 87.25 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 42.03 L 47.115 56.312 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"><\/path><path d=\"M 39.876 60.503 c -1.937 0 -3.757 -0.754 -5.127 -2.124 l -6.146 -6.145 V 87.25 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 59.844 C 41.952 60.271 40.933 60.503 39.876 60.503 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"><\/path><path d=\"M 22.937 46.567 L 11.051 58.453 c -0.298 0.298 -0.621 0.562 -0.959 0.8 V 87.25 c 0 1.519 1.231 2.75 2.75 2.75 h 8.782 c 1.519 0 2.75 -1.231 2.75 -2.75 V 48.004 L 22.937 46.567 z\" transform=\" matrix(1 0 0 1 0 0) \" stroke-linecap=\"round\"><\/path><\/g><\/svg><\/p>\n<div class=\"Collapsible-proLivePlayerCloseOrExpand\"><\/div>\n<\/div>\n<p><iframe title=\"Shares of AMC plummeted after APE conversion was announced Aug. 14.\" src=\"https:\/\/www.cnbc.com\/appchart?symbol=AMC&amp;dtLeft=2023-08-11&amp;dtRight=now&amp;type=mountain&amp;embedded=true&amp;%24DEVICE%24=undefined\" height=\"460\" scrolling=\"no\" style=\"border:0;width:100%\"><\/iframe><\/p>\n<p>Shares of AMC plummeted after APE conversion was announced Aug. 14.<\/p>\n<\/div>\n<div class=\"group\">\n<p>&#8220;The continued decline in AMC shares&#8230;is likely due to investors focusing on the strong possibility that AMC begins issuing large amounts of equity to address the debt balance,&#8221; Eric Wold, an analyst at B. Riley Securities, told CNBC Tuesday. &#8220;While this is expected, I think this overlooks the opportunity for management to also utilize that access to capital and the still-elevated valuation multiple to pursue additional acquisition and expansion opportunities outside of the exhibition space.&#8221;<\/p>\n<p>Wold sees the stock conversion as a way for AMC to weather the global exhibition industry&#8217;s prolonged post-pandemic recovery as well as any future impacts from the ongoing writer and actor strikes in Hollywood.<\/p>\n<p>Wold&#8217;s current projections show AMC is unlikely to move into positive free cash flow territory until 2025, so having additional liquidity is necessary for the company&#8217;s immediate future. <\/p>\n<p>Wold currently holds a $4.50 price target for the stock, on the high end of analysts that cover AMC.<\/p>\n<p>Meanwhile, Roth MKM&#8217;s Handler is on the opposition end: His price target is just 50 cents.<\/p>\n<p>&#8220;My negative view towards the shares is really a valuation call,&#8221; Handler said. &#8220;We continue to believe the company&#8217;s shares are trading at an irrational valuation.&#8221;<\/p>\n<p>Handler noted that AMC would need to generate nearly $1 billion in adjusted EBITDA to justify its current market capitalization, a figure that is 78% higher than Roth MKM&#8217;s forecast for 2024 and 5% higher than the company&#8217;s all time high EBITDA of $929 million, generated in 2018.<\/p>\n<p>Still, liquidity concerns have been alleviated for now, Handler said.<\/p>\n<\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.cnbc.com\/2023\/08\/22\/amc-shares-crater-as-investors-brace-for-stock-conversion.html\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>AMC Entertainment shares plummeted more than 20% Tuesday, slipping to a new 52-week low of $2.46 per share, as investors brace for a stock conversion later this week. On Friday, the movie theater chain&#8217;s preferred equity units, dubbed APE shares, are set to be transformed into common stock just one year after they began trading<\/p>\n","protected":false},"author":1,"featured_media":13718,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[43],"tags":[],"class_list":{"0":"post-13717","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>AMC shares crater as investors brace for stock conversion | iSafeSpend<\/title>\n<meta name=\"description\" content=\"AMC Entertainment shares plummeted more than 20% Tuesday, slipping to a new 52-week low of $2.46 per share, as investors brace for a stock conversion\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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