In some ways, the new shares are similar to the benefits of free popcorn and exclusive screenings that Aron has rolled out in recent months. Of eight analysts surveyed by FactSet, three have hold ratings on AMC and five have sell ratings. Speaking during a conference call to discuss the results, Aron said that AMC has the flexibility to issue more “Apes” in the future. AMC is screening Swift’s The Eras Tour documentary in theaters and capturing 43% of box-office revenues in the process.

  1. Adam Aron, chief executive officer of the world’s largest cinema chain, said the new financial instrument would be akin to a stock split.
  2. Currently the company has issued just over half of its approved preferred shares with the special dividend.
  3. As would be expected, AMC issued the new APE units in an effort to raise more money.
  4. On September 6, AMC announced its intention to sell 40 million more common shares.

A dividend is a portion of a company’s profits that is paid to its shareholders, usually quarterly. Cash dividends are paid out either as a check sent to the investor or as a credit to a brokerage account, which can then be reinvested. Dividends are typically paid according to how many shares you have.

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“With the creation of APEs, AMC is deeply and fundamentally strengthening our company,” Aron said in a separate shareholder letter issued Thursday. “Given the flexibility that APEs will give us, we likely will be able to raise money if we need or so choose, which immensely lessens any survival risk as we continue to work our way through this pandemic to recovery and transformation.” AMC raised billions during the pandemic by selling new stock but ran out of shares to sell. Investors, fearing dilution, rejected the company’s efforts to issue additional stock. AMC also reported its second-quarter results after market close, reporting a narrowing loss and revenue in line with analysts’ expectations.

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Just ahead of earnings Thursday, the company announced it would issue a special dividend to investors of one AMC preferred Equity unit for each of AMC Class A common stock outstanding at the close of business on Aug. 15. The company has applied to list these units on the New York Stock Exchange under the symbol “APE,” in reference to the group of investors who have helped revive the stock, starting Aug. 22. AMC is approved to issue up to 1 billion APE units with its board able to authorize up to 5 billion. Currently the company has issued just over half of its approved preferred shares with the special dividend.

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The stock surge helped the company strengthen its financial position, as executives seized upon it to sell shares and repurchase debt. The reality is that very few people interested in either AMC shares or APE units are concerned about a potential bankruptcy  and are more likely just looking to make short-term trades on current sentiment. The nature of the preferred shares should lead them to trade similar to AMC common stock but the real mover for the moment appears to be how much it is discussed on Reddit. On September 6, AMC announced its intention to sell 40 million more common shares.

That means you must own AMC shares before Friday, August 12th 2022. The extra cash could be used to fund acquisitions of other theaters, pay down debt or even push into unrelated businesses, like AMC’s 2021 purchase of a large stake in a gold mining company. Going forward the APE units are not linked to AMC shares and can thus be bought and sold separately.

Aron cited the popularity of films such as Doctor Strange in the Multiverse of Madness, Elvis and Top Gun for boosting attendance during the latest financial quarter. The domestic box office is about to go into a funk for two-and-half months due to the lack of tentpole product, but shares of AMC Entertainment keep on trucking. APE shares will start trading on the NYSE on August 22nd, 2022. AMC Entertainment has embarked on a meme-friendly experiment to give a token reward to its retail investor base while also creating a backdoor way to raise more cash down the line. Shares of the meme-stock darling, which skyrocketed to a high of $72.62 on June 2, 2021, have fallen 29.7% this year. AMC’s stock closed up 2.47% at $18.66 on Thursday, well below its 52-week high of $52.79.

In some ways, the unusual move resembles a stock split, where investors get additional stock proportional to every one share they previously owned. Each APE unit may be converted in the future to one common share of AMC, making this move like a 2-for-1 split. These preferred equity units are a workaround, of sorts, and free AMC up to sell additional units of stock as it continues to revive its business after the pandemic. After offering the 517 million APE units, AMC will still have around 4.5 billion units remaining that it could sell to raise funds.

In the first day of ticket presales, the concert film sold $26 million—a record in advance ticket sales for AMC. The bulls argue that AMC’s capital restructuring moves have improved the company’s fundamentals and set the stage for growth. They also cite improving industry conditions, touting the summer box-office success of Barbie and Oppenheimer. Importantly, APEs were also convertible to AMC shares on a 1-to-1 basis. Of seven analysts surveyed by FactSet, three have a hold rating and four have a sell rating on AMC. Speaking during a conference call to discuss the results, CEO Aron said that AMC has the flexibility to issue more APEs in the future.

This is true and that is due to the fact that those short do not receive the dividend. He decides to short 5M shares and waits untill the prices drops. A bunch of apes come along and buy up all those shares and won’t sell them back. No problem for Kenny, he has all kind of tricks to hide his shorts and postpone buying the 5M shares back.

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Will I get APE stock for my AMC holdings?

Ultimately, market trading determines the ongoing prices of AMC shares and APE units. They are very similar in nature, so logic says that initially the AMC share should approximately trade for 50% and the APE unit 50% of where shares trade just before the dividend. For now, it looks like the movie theater company has delayed that outcome, thanks to some aggressive moves to stabilize its balance sheet. Investors aren’t sold on the strategy, however, and AMC stock has taken a beating.

Unofficially, the distribution of APE shares in 2022 was effectively a 2-for-1 stock split. As noted, the company gave away one APE share for every one AMC share owned. While the two stocks had different tickers, they represented ownership in the same company. The stock dividend ultimately doubled AMC’s share count, just as a 2-for-1 stock split would.

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