Traders work on the floor of the New York Stock Exchange, August 22, 2022.
Brendan McDermid | Reuters
Shares of AMC Entertainment fell sharply on Wednesday after the movie chain announced in a filing that it plans to sell up to 40 million new shares to raise cash.
The stock fell 36.8% to $8.62 per share. On a split-adjusted basis, it was AMC’s lowest close ever, according to FactSet.
AMC shares fell sharply on Wednesday.
AMC was widely expected to sell additional shares following the successful conversion of APE preferred stock into AMC common stock in August. This followed the settlement of a lawsuit opposing the decision.
The movie chain has sold millions of shares of common stock in recent years after becoming one of the so-called stock memes popular with retail marketers. Sales helped AMC stabilize after the Covid pandemic effectively brought movie business to a halt.
However, AMC exhausted its share allocation and needed shareholder approval to issue more. The company issued the APE preferred stock as part of a strategy to change its corporate voting structure and seek shareholder approval to sell additional common stock.
AMC said in its filing Wednesday that it would sell the new shares through “at-the-market” offerings, with no specific time frame. Citigroup, Barclays, B. Riley Securities and Goldman Sachs are listed as sales agents in the filing.
The US film industry remains below pre-pandemic levels, and ongoing strikes in Hollywood have clouded the release slate for the remainder of 2023 and 2024. AMC and pop star Taylor Swift announced last week that the cinema chain would serve as a distributor for a film. film-concert of The Eras Tour which will be released in October.