AMC Entertainment Holdings, Inc. AMC is down about 70% since the start of the year as weakness attributed to broader market sentiment and the ‘Stonk’ phenomenon has lost some of its shine.
What happened: Sector-specific developments could also weigh on sentiment. A Wall Street Journal report in mid-August said it owned Regal Cinemas Cineworld Group plcCNNWF plans to file for bankruptcy protection.
AMC CEO Adam Aron took to Twitter to allay investor concerns about the theater chain’s fundamentals after the stock fell 7.77% to $8.19 on Tuesday.
Aron said that AMC is “quite different.” The company ended the June quarter with more than $1 billion in cash, he noted. In addition, the company is able to readily raise equity, he added.
“The best thing AMC can do for our shareholders is to continue to have plenty of cash,” said AMC’s CEO.
See also: Jaws to the Rescue: $3 Ticket Promotion Boosts Admissions for AMC and Others, Led by Older Titles
Why it matters: AMC reported in early August that its second-quarter revenue more than doubled from a year earlier, when the world was still grappling with COVID-19. Notwithstanding the improved attendance and revenue, the company reported a stronger-than-expected loss for the quarter.
Aaron’s statement that the company has no problem raising equity comes amid growing shareholder dissatisfaction with the frantic pace at which it is selling stock to raise cash. Sensing the sentiment, AMC withdrew a proposal to increase outstanding shares in mid-2021 that would have allowed it to sell more shares.
AMC’s decision to issue preferred stock, which has recently begun trading on the NYSE under the ticker symbol APE, is seen as a move to circumvent shareholder resistance to share sales.
