AMC Entertainment Holdings, Inc. AMC has lost about 70% since the start of the year, with the weakness attributed to the broader market sentiment and the "stonk" phenomenon losing sheen.
What Happened: An industry-specific development may also be weighing on sentiment. A Wall Street Journal report said in mid-August that Regal Cinemas owner Cineworld Group plcCNNWF is planning to file for bankruptcy protection.
Adam Aron, CEO of AMC, took to Twitter to assuage investor concerns about the theater chain’s fundamentals after its stock slid 7.77% to $8.19 on Tuesday.
Aron said that AMC is “vastly different.” The company ended the June quarter with more than $1 billion in liquidity, he noted. Additionally, the company is in a position to readily raise equity, he added.
“The best thing AMC can do for our shareholders is to continue to have ample cash,” the AMC CEO said.
Why It's Important: AMC reported in early August that its second-quarter revenues more than doubled from a year ago, when the world was still grappling with COVID-19. Notwithstanding the improved attendance and revenue, the company reported a wider than expected loss for the quarter.
Aaron’s statement that the company can readily raise equity comes against the backdrop of increasing shareholder disgruntlement over the frenetic pace at which it has been selling stock to raise cash. Sensing the mood, in mid-2021, AMC withdrew a proposal to increase outstanding shares that would have allowed it to sell more shares.
AMC’s decision to issue preferred shares, which recently began trading on the NYSE under the ticker symbol APE, is seen as a move to circumvent shareholder resistance to stock sales.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.