AMC Stock Price Plummets 9% – Reverse Stock Split & Conversion

AMC stock price bleeds for two continuous trading sessions, as stockholders approved the 1-for-10 reverse stock split and related plans. The agreement is a step to enable the movie-theater chain to convert recently issued series of preference shares, APE, into common stock. AMC shareholders show support to the company’s decision as it continues to drain money because of deserted cinemas.

The result of the special shareholder meeting held by AMC Entertainments is predicted to lead the theater chain to continue cash inflow. Other aims include reduction of debt load through stock sales and increase in share base.

Obstacle already in way of AMC

AMC stock split and conversion is initiated to manage losses of the company and transform negative outflows to cash inflows. However, a Delaware Chancery Court injunction hearing scheduled for April 27 can obstruct any new debt-raising policies for AMC. The hearing is focused around the class-action lawsuit that accuses AMC of evading shareholders who were opposing addition of shares via preferred stock APE.

The Allegheny County Employees’ Retirement System had filed a class-action lawsuit against AMC and its board members. The complaint also seeks a temporary restraining order against the March 14 conversion vote. AMC Entertainments will have the flexibility to issue stock, exchange debt for shares or make any acquisitions, while the outcome of the injunction hearing is pending.

AMC Stock Price Action

AMC stock price has been under consolidation for the past few months. The price has moved in a range bound region, unable to break the resistance near $8.76. The recent action shows bearish momentum and a declining trend. AMC stock price has fallen for two continuous trading sessions and lost 9.27% in a single day. The trading volume suggests highly volatile market and selling pressure, especially after shareholders approving the conversion.

The Fib retracement levels show price, if it forms a rally, can face resistance at second level. AMC stock price, if successfully breaks the resistance, can rally near $16.80 to achieve a new high for 2023. The MACD forms a negative crossover and records ascending seller bars, showing flush of negative emotions among the existing investors. The RSI drops to reach the ceiling range, influenced by sellers’ gaining dominance, and exerting pressure.

Conclusion

AMC stock price has shed hugely in the past two trading sessions. The loss is attributed to shareholders’ approval to convert APE shares into common stock and execute 1-for-10 reverse stock split. The present market scenario suggests bears taking over, indicators slightly hint at future price reversal. The holders of AMC can trust the support level near $3.78.

Technical levels

Support levels: $3.78 and $1.20

Resistance levels: $8.76 and $16.80

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only, and they do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing