AMC (AMC) stock tanked in early trading Monday, falling nearly 40% as investors fear further dilution of their common stock.
Over the weekend, a Delaware court approved a merger between AMC and AMC preferred shares (APE) that will make all outstanding shares AMC common stock. Additionally, a 1-to-10 reverse stock split is scheduled for August 24, according to an SEC filing, meaning every 10 shares held by an investor will now become one share but at a higher value.
APE shares will stop trading on August 25, per the filling.
AMC shares have been volatile over the past several months as this conversion was initally approved by shareholders in March then halted in late July. AMC CEO Adam Aron had previously said the stock conversion was crucial to AMC have proper cash balances in 2024 and 2025.
“AMC should now be able to raise additional equity capital,” Aron wrote in a letter to investors on Sunday. “We can use this access to equity capital to shore up our cash reserves, pay down debt, invest in growth initiatives to strengthen our operating profitability and pursue transformative merger and acquisition opportunities.”
AMC’s stock had risen over the last month as a blowout opening weekend for “Barbenheimer,” the double feature combination of Barbie and Oppenheimer, resulted in AMC’s best single day performance since before the pandemic. Broadly, the company has been battling back since 2020 when theater attendance dwindled due to COVID-19 related restrictions.
In the most recent quarter reported on August 8, the company’s $1.35 billion quarterly revenue came in higher than analysts projections for $1.29 billion. The company’s $0.00 earnings per share also beat Street estimates for a loss of $0.04 per share.
The quarter marked the first time the company hasn’t reported adjusted loss per share since the fourth quarter of 2019. But while AMC’s revenue for the most recent quarter topped estimates, it still lagged revenue from the same quarter in 2019, prior to pandemic disruptions, by about $150 million. In the most recent quarter, AMC saw attendance down roughly 30% from…