The apes can take a breather after a tough start to the week.
AMC stock rose about 4% in premarket trading on Tuesday, coming on the heels of tanking 41% amid news of a bankruptcy at rival Cineworld and the debut of new $APE preferred shares. APE stock rallied roughly 11% in premarket trading after dropping 13.6% on debut day.
The company’s new class of shares — a nod to the retail investors who powered the stock during the COVID-19 pandemic and commonly refer to themselves as apes — began trading on the NYSE on Monday. The stock was halted 10 times during the session, AMC CEO Adam Aron noted on Twitter.
A single APE unit was granted for each common share, meaning that about 517 million shares of this new stock will be formed.
Despite the weak debut for APE, AMC supporters talked up the new class of stock throughout the day on Twitter and Reddit message boards.
“Im not f***ing leaving,” one self described ape tweeted to Yahoo Finance.
Aron told Yahoo Finance Live (video above) that the company’s new APE shares should allay fears that the movie chain could cripple under the weight of debt incurred during the COVID-19 pandemic.
“It takes survival risk off the table in the near term,” Aron said. “So we can raise cash if we need it. That is good for our shareholders.”
Aron added that this latest clever initiative (the other being the gold mine AMC bought earlier this year) will help AMC raise cash to reduce debt and look at acquisitions of more movie theater chains.
“The other thing it lets us do is raise capital to grow, raise capital for M&A activity, and raise capital to pay down debt,” Aron said. “These are all good things for AMC. That, combined with an improving box office, a recovery from the horrible pandemic of 2020 and early 2021, these are good days for AMC.”
Aron said the company could theoretically list five billion APE shares based on what was approved by shareholders back in 2013 but added that he has no plans to do so.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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Source: https://finance.yahoo.com/news/amc-stock-bounce-after-bruising-session-101022782.html