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AMC Entertainment stock fell 2% today and dropped 15% this week to establish a new all-time, split-adjusted low of $5.17.
It is a notable turnaround after the unlikely boost delivered in 2020 by meme-happy individual investors who built positions even as movie theaters were shuttered by Covid.
Some shareholders have more recently become restless about the challenges facing the No. 1 movie theater circuit in what is shaping up as a daunting year at the box office. The overall release slate as of now features significantly fewer major titles than last year due to factors including the dual strikes of 2023 and continued uncertainty about post-pandemic moviegoing.
In addition to those operational issues, there is the specter of dilution in light of the company’s issuing of new shares in order to pay down debt. In the most recent instance earlier this week, the exhibitor reported issuing more than 3.25 million Class A shares in exchange for $22.5 million, which it plans to use to pay down notes due in 2026.
The concern some investors have is about the increased volume of stock limiting buy-side demand and diluting the value of all shares, though many on Wall Street have indicated they fully expect AMC to continue using share exchanges. In this week’s filing, the company said it “may engage in similar transactions in the future but is under no obligation to do so.”
Last November, despite strong third-quarter financials and optimism in Hollywood about the end of the SAG-AFTRA strike, AMC Entertainment stock plunged after the company announced a plan to raise up to $350 million through stock sales.
AMC Entertainment will report fourth-quarter earnings in the coming weeks. Across the industry, the holiday quarter was a bit lackluster, especially compared with the comparable frame in 2022 and breakout titles like Avatar: The Way of Water.
