Originally published at: AMC Theaters stock sinks as it begins selling "$APE" shares | Boing Boing
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“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.”
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They’re talking about mergers and acquisitions? Jesus…
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AMC Preferred Equity (APE) shares
Preferred equity over what, exactly?
Somehow I suspect that everything will be long gone in the bankruptcy sale before this class of share sees a penny.
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125 Years is a good run for a public art form. Ballet and Opera only survive because of injections of public cash to maintain a facade of “culture”.
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Some backstory on this: The AMC board wants to issue new shares to raise money, but the current shareholders voted this down at the last meeting (because then their shares would be worth less.) So AMC came up with a gimmick: They’d do a two-for-one stock split, but the stocks created in the split would get a different name. Then at a future date they’d issue new shares under the new name - the shareholders said that they couldn’t issue any new AMC shares, but they didn’t say anything about APE shares. Frankly this seems a bit sketchy to me and it looks like it’s inviting shareholder lawsuits.
The stock price is more-or-less what you’d expect after a split - the new “AMC+APE” price is close to the old “AMC” price. It’s still in flux because nobody’s quite sure what the relative value is.
The “meme stock” crowd has been excited because they’ve got this bizarre theory that the split will bankrupt the short sellers. (“OK, so people who are short on AMC need to buy a share of AMC plus a share of APE to close the short. But APE shares just got distributed today, and if everyone who has one refuses to sell for less than a trillion dollars, then the short sellers won’t be able to cover, and then something something something, and then I’ll be rich!”)
The “meme stock” crowd likes to call themselves “apes”, so the APE ticker name is specifically intended to lure them in. But AMC picked a bad week to release, Bed Bath and Beyond had a huge pump-and-dump last week and the meme stockers are still focused on that.
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Lemme see if I have this right: so the new APE shares were supposed to be twice what the old AMC shares are, but as the new shares are trading for the same price as the old, they effectively lost half their value. Is that right?
Admittedly, when I first saw the head- and bylines, I thought it was something to do with the bored ape yacht club and NFTs or something as bad.
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More like: a decline in AMC is expected, because the two stocks (AMC+APE) now represent the same value, more or less, as AMC alone did yesterday.
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