- Wednesday, October 16, 2024
Stocktwits, a social platform for investors and traders, is observing a sense of "panic" surrounding AMC Entertainment Holdings Inc., the movie theater chain and meme stock favorite. According to Tommy Tranfo, head of community at Stocktwits, sentiment towards AMC has reached an all-time low, evident from the data, with users expressing extreme fear and generating an exceptionally high message volume.
On Tuesday, AMC's stock (AMC) fell by 17.7%, following a previous decline of 23.7% on Monday, thereby ending a four-day winning streak. Additionally, approximately 26.7% of AMC's float is shorted.
Tranfo highlights intense competition for investor attention, as AMC now vies with other stocks, such as Tupperware Brands Corp. (TUP), WeWork Inc. (WE), and Nvidia Corp. (NVDA). Tranfo explains that AMC investors are realizing that there are new and enticing options available in the market, including more popular meme stocks like TUP and WE, as well as upcoming events like NVDA earnings that are generating significant buzz.
According to Tom Bruni, a senior writer at Stocktwits, investors initially anticipated a convergence between APE and AMC shares, with APE units surging in value. However, the opposite has occurred, as AMC shares have drastically decreased. Bruni attributes this unexpected outcome to the dilution and reverse stock split.
AMC to Implement Reverse Stock Split and Conversion
In a recent filing with the SEC, AMC announced its plans to carry out a reverse stock split on August 24th. This date also serves as the record date for a litigation-settlement payment. As a result, there will be a conversion of APEs (a term coined by meme stock investors) into AMC common stock on August 25th. Following the conversion, the APEs will no longer be traded and will be delisted from the New York Stock Exchange.
AMC has outlined that settlement payments will consist of one share of Class A common stock for every 7.5 shares owned by settlement-payment recipients as of August 24th. With an estimated 51,919,239 shares expected to be held by recipients, a total of 6,922,566 shares will be issued by AMC in the settlement.
The APE units experienced a decline of 10.4% on Tuesday. The name "APE" is a term embraced by meme stock investors who refer to themselves as "apes" or part of the "ape nation."
By moving forward with the stock-conversion plan, AMC aims to enhance its resilience and eliminate the capital-raising inefficiencies associated with APE units trading at a considerable discount compared to AMC shares. In a recent letter, AMC CEO Adam Aron emphasized the strategic benefits of this plan.
Wedbush analyst Alicia Reese highlighted the significance of resolving AMC's court case, stating that it removes a substantial burden for the company. She anticipates that both AMC and APE shares will converge around $3 during the conversion process.
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