- AMC stock closes down sharply on Monday.
- AMC plus APE on net close little changed from Friday.
- AMC shareholders received one APE share for every one AMC share held.
APE shares began trading on Monday with much confusion and speculation from investors and media commentators alike. The basic math of the equation was something like a 2-for-1 stock split. AMC holders got one APE share for every one AMC share held. So the logic dictated that the two APE and AMC shares combined should be somewhere close to the close of AMC on Friday.
IMPORTANT! Remember that with the APE already having had its first NYSE trade today, the value now of your AMC holdings consists of the prices of your AMC shares and your new APE units COMBINED. Add together an AMC share plus a new APE unit, compared to just an AMC share before. pic.twitter.com/zfbo0yXCDp
— Adam Aron (@CEOAdam) August 22, 2022
APE stock news
APE shares were so named after the growing band of AMC shareholders who identified with the short squeeze mentality of the original meme stock frenzy. AMC Apes, they called themselves, with AMC CEO Adam Aron as the chief APE or silverback. It was he who came up with the APE ticker and name for the new issue of preference shares, but many Wall Street insiders are alluding to the fact that these new APE shares could be used to raise capital without the need for shareholder approval. This is something Adam Aron has already alluded to and returned to in an investor relations Q&A on AMC's website.
To sum it up, the creation of APEs should help clarify for you who is in our current shareholder base and how many company issued shares there are. Beyond that, though, we believe APES should let AMC raise capital, pay debt and do more. Not good news for the doubters. #Checkmate
— Adam Aron (@CEOAdam) August 6, 2022
It only would be dilution if we decide after August 22 to issue more APEs, above and beyond the initial dividend amount. But as I tweeted earlier, if we were to do that smartly, that could be very good for AMC investors. Our track record at AMC is excellent on this score so far.
— Adam Aron (@CEOAdam) August 6, 2022
It would seem from those comments that there is the possibility of dilution, and Wall Street analysts have also mentioned that as a possibility. Adam Aron is correct that dilution in the past has worked well for AMC without hurting the share price. It is a bit of a double-edged sword though. AMC needs to raise capital, and APE shares could be a way of doing that. That would secure the long-term future of the company but at the possible expense of diluting shareholders. Which do you prefer: a struggling company or a well-capitalized one even if that means dilution?
APE stock forecast
Recent news from the sector has not been positive with competitor cinema chain Cineworld (CINE) possibly in line for Chapter 11 bankruptcy. AMC has a large debt pile and deferred leases but has more capital at its disposal and, as we can see above, the possibility of raising yet more capital. So AMC and CINE are not the same, but with threats of dilution a possibility, we will remain on the sidelines for now.
APE 15-minute chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD drops to near 1.0850, further support at nine-day EMA
EUR/USD continues to lose ground, trading around 1.0860 during the Asian hours on Friday. From a technical perspective on a daily chart analysis indicates a sideways trend for the pair as it continues to lie within the symmetrical triangle.
GBP/USD posts modest gains above 1.2650, focus on the Fedspeak
The GBP/USD pair posts modest gains near 1.2670 during the Asian session on Friday. Meanwhile, the USD Index recovers some lost ground after retracing to multi-week lows near 104.00 in the previous session.
Gold price gains ground, with Fed speakers in focus
The Gold price trades with a positive bias on Friday. The bullish move of precious metals in the previous sessions was bolstered by the softer-than-expected US inflation data in April, which triggered hope for rate cuts from the US Fed.
LINK price jumps 10% as Chainlink races toward tokenization of funds
Chainlink price has remained range-bound for a while, stuck between the $16.00 roadblock to the upside and $13.08 to the downside. However, in light of recent revelations, the token may have further upside potential.
Fed speak tempers rate cut expectations
The biggest takeaway into Friday is the latest round of Fed speak. These Fed officials reiterated their stance rates should be kept restrictive for a longer period of time until there is more clear evidence inflation is heading back towards the 2% target.