The AMC 25 and Regal Cinemas on 42nd Street in New York’s Times Square.
Richard Levine | Corbis | Getty Images
Shares of theater chain and meme trader favorite AMC fell sharply Monday as the struggles of a rival company appeared to weigh on the stock.
AMC lost more than 30% in premarket trading, building on a loss of more than 26% last week. The drop comes as rival Cineworld said Monday it was considering filing for bankruptcy.
After Cineworld issued a warning about its liquidity position last week, Adam Aron, CEO of AMC, said in a statement that “we are confident in AMC’s future” and that the company was “quite optimistic” about films coming in the fourth quarter. and come in 2023.
Even if major movie hits like “Top Gun: Maverick” have been seen in 2022 and studio executives have expressed an interest in returning to theaters rather than just streaming releases, the US box office will remain well below pre-pandemic levels.
AMC reported more than $5 billion in long-term debt at the end of the second quarter. That total adds up to more than $10 billion, including lease obligations and other long-term liabilities.
A new preferred stock dividend from AMC could also affect trading. The theater chain’s “APE units,” a tool for the company to potentially raise additional funds in the future, are expected to begin trading Monday. The new share class resembles a share split in some respects.
“Remember, as the APE sees its first trade on the NYSE tomorrow morning, the value of your AMC investment is the combination of your AMC shares and your new APE units. An AMC share plus a new APE unit at added together – compared to just an AMC share before,” Aron further wrote Twitter on Sunday.
The recent decline for AMC’s stock coincides with the sharp turnaround for Bed Bath & Beyond. Both names have become meme stocks, with a large percentage of retail investors and social media followers. Bed Bath & Beyond fell more than 40% on Friday after activist investor Ryan Cohen revealed he had sold his entire stake in the company.