AMC shares slide 33% ahead of start of trading for preferred equity units, or Apes

AMC Entertainment Holdings Inc. shares
AMC,
-6.58%
tumbled 33% premarket Monday, ahead of the start of trading for its AMC Preferred Equity Units
APE,
,
or Apes, which were declared by the company as a special dividend to class A common shareholders earlier in August. “While we understand there was a notable level of initial confusion around the mechanics of the APEs and the potential need for a shareholder vote to unlock their value (to either shareholders or AMC), we continue to view this as a clever way for management to take advantage of the enthusiastic retail interest in the common equity over the past 18 month,” B. Riley analyst Eric Wold wrote in a note. “While the level of liquidity generated by this new class of equity, and the speed at which that materializes, is unclear at this point, we would be surprised if the two classes of equity (the APEs and common shares) did not trade at relatively equal prices after the initial dust settles-given the equal economic value and voting rights.” AMC is one of the meme stocks that has been driven up 49% in the last three months by individuals who gather on Reddit forum WallStreetBets. The stock is down 33.8% in the year to date, while the S&P 500
SPX,
-1.29%
has fallen 11%.