AMC CEO Adam Aron will not sell more stock ‘any time soon,’ tells investors, ‘I ride with you’

Aron sold more than $40 million of AMC Entertainment Holdings Inc.’s
AMC,
+1.30%
stock between November 2021 and January 2022.

See: AMC’s CEO asks board to freeze his pay, wants other top execs to forgo raises: ‘No increase for those at the top is the right thing to do’

Last month AMC’s stock plunged toward 22-month lows after the company announced a $110 million equity capital-raising plan and said it was seeking a 1-for-10 reverse split of its common stock. Shares of the meme stock darling fell 75.6% in 2022, far outpacing the S&P 500 Index’s 
SPX,
-0.16%
decline of 19.4%. The stock hit a 52-week low of $3.81 on Dec. 28, 2022.

Last week Aron said he has asked the company’s board to “red circle and freeze” his target cash and stock pay for 2023. Aron, who has led AMC since 2016, described his move in a series of tweets as AMC shares headed for their third consecutive decline after Aron announced the equity sale and plans for the reverse stock split.

See Now: AMC CEO’s pay freeze a move to assuage frustrated investors, says Wedbush analyst

The pay freeze is a move to assuage the movie-theater chain and meme stock phenomenon’s investors, according to Wedbush Vice President of Equity Research Alicia Reese.

AMC, like its fellow meme stock GameStop Corp.
GME,
-2.49%,
 was a major beneficiary of the meme-stock frenzy in January 2021, which sent the struggling company’s shares skyrocketing to dizzying heights.

AMC’s Preferred Equity units
APE,
-6.39%,
 or APEs, made their trading debut in August, heralding the latest chapter in a journey that took the cinema chain from a beleaguered pandemic poster child to meme-stock phenomenon.

See: What can we expect from meme stocks AMC, GameStop and Bed Bath & Beyond in 2023? 

The APEs have fallen 76.5% since their debut. The name is a nod to the investors who turned the company into a meme stock, who often refer to themselves as “apes” or “ape nation.”

In another tweet Monday, Aron described his AMC and APE shareholdings.

“Some of you also forget that I currently own or will vest in about 3 million AMC shares and 3 million APE preferred units,” he wrote. “That is an enormous incentive to do what is best for all AMC shareholders. I work in the best interests of AMC shareholders because I am one — and a big one!”

Last week Aron explained that he had also asked AMC’s top 15 to 20 executives to forgo an increase to their cash salaries for 2023, and that they had agreed. 

See Now: Is the golden age of the meme stock rally over?

Despite the top-level salary freezes, Aron confirmed that AMC’s employees will get a raise. “Yes, absolutely yes,” he tweeted in response to a question posed on Twitter. “We are asking for financial sacrifice only from those at the very top.”

In November AMC reported its 12^th consecutive quarterly loss, sending the company’s stock tumbling. AMC, which describes itself as the world’s largest movie theater chain, ended the third quarter with just under $895.8 million of liquidity. “We will use it to continue to grow but also to continue to de-lever,” said Aron during a conference call to discuss the results.

In a filing with the Securities and Exchange Commission on Dec. 21, 2022, AMC said that it had participated in discussions about a potential acquisition of rival Cineworld Group PLC
CINE,
+2.14%
but said that a definitive agreement with Cineworld’s lenders has not been reached and that negotiations are not continuing.

See Now: AMC stock tumbles after reporting 12th consecutive quarterly loss

“Talks have halted with some Cineworld lenders for AMC to acquire some Regal/Cineworld theatres, with APEs being partial payment,” tweeted Aron on Dec. 21. “We are disciplined to use our cash or stock ONLY when we are convinced that doing so is in the best interests of AMC shareholders.”

London-based Cineworld, which owns Regal Cinemas, filed for Chapter 11 bankruptcy protection in September 2022. On Tuesday Cineworld said that neither the company nor its advisors are in talks with AMC regarding the sale of its cinema assets.

In a note released Tuesday, B. Riley Securities lowered its AMC price target to $4.50 from $7.50. The analyst firm also lowered its 2023 and 2024 industry box office estimates from $9.5 billion and $10.7 billion to $8.9 billion and $10.1 billion, respectively. “While studios are increasingly endorsing the theatrical window, post-production backlogs are delaying releases,” wrote B. Riley Securities analyst Eric Wold.