AMC says market volatility ‘unrelated to our underlying business’

on Jun 3, 2021
  • AMC Entertainment files with SEC to sell more than 11 million shares.
  • Proceeds from the share sale will fund general corporate purposes.
  • The theatre chain launched AMC Investor Connect on Wednesday.

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In an SEC filing on Thursday, AMC Entertainment Holdings Inc (NYSE: AMC) expressed plans of selling over 11 million shares amidst the retail traders driven bull run that has increased its per-share price by another 150% in the past three days.

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Ever since AMC became the top favourite of WallStreetBets, the growth in its stock has been unprecedented. On a year-to-date basis, it is now close to 3,000% up, which gives it a market cap of about $30 billion.  

AMC’s remarks in the SEC filing

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The theatre chain also said in its SEC filing:

“We believe that the recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last. Under the circumstances, we caution you against investing in our Class A common stock unless you are prepared to incur the risk of losing all or a substantial portion of your investment.”

The news comes a day after the Leawood-based company launched a new portal, AMC Investor Connect, on its website that offers company updates, exclusive promotions, and a medium to communicate directly with the chief executive Adam Aron. Aron has embraced support from the retail investors and had postponed the annual shareholders meeting by more than a month to give them a chance to participate in the event.

Proceeds from the share sale will fund general corporate purposes

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Proceeds from its share sale, AMC said on Thursday, will fund general corporate purposes, including potential acquisitions in the future and minimising existing debt. The theatre chain named Citigroup Global Markets and B. Riley Securities as its sales agents for the share sale.

A share sale dilutes the number of outstanding shares. Therefore, when companies opt for a share sale, their stock price usually takes a hit in the short term. AMC Entertainment, however, sold 8.5 million shares at roughly $27.12 per share to Mudrick Capital earlier this week and yet the stock continued to boom in the subsequent days.

AMC Entertainment closed the regular session on Wednesday at $64.23 per share and was seen trading at as low as $57 per share in pre-market trading on Thursday. The stock, however, has recovered to $60 per share now. In after-hours trading on Wednesday, AMC shares noted a record high of $71.07 per share.


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