AMC Entertainment Holdings Inc. took Wall Street by surprise with the announcement of its special “APE” dividend after the market closed Thursday.
This, of course, is a company no stranger to bold moves, as evidenced by the movie theater chain’s $27.9 million investment in gold and silver miner Hycroft Mining Holding Corp. . HYMC,
earlier this year. The dividend also marks the latest move in a fight over equity issues.
AMC’s preferred stock units will trade on the New York Stock Exchange under the symbol “APE,” a nod to the investors who turned the company into a stock meme, who often refer to themselves as “monkeys.” or “a nation of monkeys”.
The Special Dividend is the latest leg of a journey that has taken AMC Entertainment AMC,
from beleaguered pandemic victim to meme stock phenomenon. AMC’s stock status sent the company’s stock skyrocketing last year, before returning to earth.
AMC shares closed at a record high of $62.55 on June 2, 2021, after a more than sixfold rally in two weeks. With the stock down 7.2% in morning trading on Friday, it was trading 72.3% below that record close.
While AMC remains a cause celebre for a vocal community of individual investors, the company’s financial health is cause for concern, according to data from RapidRatings, a company that rates the finances of public and private companies.
The special APE dividend could help AMC reduce its massive debt load, analysts say.
See now: AMC Announces Special Dividend in the Form of “Ape” Preferred Stock; stocks fall
The dividend “should be used opportunistically to [reduce] total outstanding debt or otherwise,” Benchmark analyst Mike Hickey wrote in a note released Friday.
AMC currently has about $5.5 billion in outstanding debt, according to Hickey. “We suspect that management is aiming for leverage at 3x – 4x AEBITDA [adjusted earnings before interest, taxes, deprecation and amortization]. FY24 consensus is $660 million AEBITDA, which would translate to a total debt target of $2.3 billion, which would imply a total debt reduction target of 3.2 billions of dollars,” he added.
The benchmark has a holding rating on AMC.
“We admit we are encouraged by AMC’s preferred stock announcement as it will provide the company with the opportunity to pay down its massive debt and make investments to improve its global footprint,” the company wrote. Wedbush analyst Alicia Reese, in a note released Friday.
The APE special dividend in effect creates a two-for-one stock split, with half listed under AMC and the other half under APE, according to Reese. “AMC is pre-approved to issue up to an additional 4.5 billion APE preferred shares thereafter to raise funds,” she wrote. “Should this transaction proceed, we would expect AMC to issue a portion of its authorized APE shares in cash to repay the majority of its outstanding debt, making AMC a more attractive long-term investment.”
It would also allow AMC to reinstate its quarterly dividend much sooner than it otherwise would have, Reese added.
Wedbush has an underperform rating and $4 price target for AMC.
See now: How one investor applied lessons from the meme stock frenzy to blockchain and NFTs
AMC will issue an APE dividend for each of its nearly 517 million shares outstanding, according to chief executive Adam Aron. “Issuing tradable AMC preferred stock units only to our shareholders clarifies who is included in our current shareholder base,” he said in the statement.
The company has faced unsubstantiated Internet conspiracy theories that there are millions of synthetic AMC shares outstanding, as well as calls for a stock recount, according to a Wall Street Journal report.
The company, which issued an “I own AMC” NFT in January, will also issue an “I own APE” NFT to shareholders.
Speaking on a conference call to discuss the results, CEO Aron said AMC has the option to issue more APEs in the future.
AMC also released its second-quarter results after the market close, reporting a drawdown loss that beat expectations and revenue in line with analysts’ forecasts.
“Attendance trends have benefited from a compelling blockbuster slate and consumer demand for out-of-home experiences,” Benchmark analyst Mike Hickey wrote. “We believe the domestic box office can generate growth in a recessionary scenario.”
“AMC has maintained market share gains over its pre-pandemic average as it improves its footprint both domestically and internationally,” Wedbush’s Alicia Reese wrote. “Additionally, AMC is doing well despite macro headwinds driving up dealership costs, utility costs and wages.”
Speaking on the conference call to discuss the results, AMC CEO Aron said there was a “shortage” of new big movie titles released in August and September, adding that “things are going slow down for several weeks”. However, that will change in the fourth quarter, with a slew of big movies. These include Jamie Lee Curtis in ‘Halloween Ends’, Julia Roberts and George Clooney in ‘Ticket to Paradise’ and Tom Hanks in ‘A Man Called Otto’ as well as sequels to ‘Black Panther’, ‘Shazam’ and ‘Avatar’. .”
See now: AMC may have been a darling of meme stocks, but weakness in some key areas has put the company on shaky ground
“Similarly, the movie slate for calendar year 2023 should also put a smile on our faces,” he added. “We look forward to the fourth quarter of 2022 and look forward to calendar year 2023 with absolute joy.”
AMC’s stock has risen 17.9% over the past three months, but is still down 36.3% since the start of the year, while the S&P 500 SPX index,
fell 0.1% in the last three months and lost 13.1% this year.
Of seven analysts polled by FactSet, three have a hold rating and four have a sell rating on AMC.
AMC Entertainment Holdings Inc. took Wall Street by surprise with the announcement of its special “APE” dividend after the market closed Thursday.
This, of course, is a company no stranger to bold moves, as evidenced by the movie theater chain’s $27.9 million investment in gold and silver miner Hycroft Mining Holding Corp. . HYMC,
earlier this year. The dividend also marks the latest move in a fight over equity issues.
AMC’s preferred stock units will trade on the New York Stock Exchange under the symbol “APE,” a nod to the investors who turned the company into a stock meme, who often refer to themselves as “monkeys.” or “a nation of monkeys”.
The Special Dividend is the latest leg of a journey that has taken AMC Entertainment AMC,
from beleaguered pandemic victim to meme stock phenomenon. AMC’s stock status sent the company’s stock skyrocketing last year, before returning to earth.
AMC shares closed at a record high of $62.55 on June 2, 2021, after a more than sixfold rally in two weeks. With the stock down 7.2% in morning trading on Friday, it was trading 72.3% below that record close.
While AMC remains a cause celebre for a vocal community of individual investors, the company’s financial health is cause for concern, according to data from RapidRatings, a company that rates the finances of public and private companies.
The special APE dividend could help AMC reduce its massive debt load, analysts say.
See now: AMC Announces Special Dividend in the Form of “Ape” Preferred Stock; stocks fall
The dividend “should be used opportunistically to [reduce] total outstanding debt or otherwise,” Benchmark analyst Mike Hickey wrote in a note released Friday.
AMC currently has about $5.5 billion in outstanding debt, according to Hickey. “We suspect that management is aiming for leverage at 3x – 4x AEBITDA [adjusted earnings before interest, taxes, deprecation and amortization]. FY24 consensus is $660 million AEBITDA, which would translate to a total debt target of $2.3 billion, which would imply a total debt reduction target of 3.2 billions of dollars,” he added.
The benchmark has a holding rating on AMC.
“We admit we are encouraged by AMC’s preferred stock announcement as it will provide the company with the opportunity to pay down its massive debt and make investments to improve its global footprint,” the company wrote. Wedbush analyst Alicia Reese, in a note released Friday.
The APE special dividend in effect creates a two-for-one stock split, with half listed under AMC and the other half under APE, according to Reese. “AMC is pre-approved to issue up to an additional 4.5 billion APE preferred shares thereafter to raise funds,” she wrote. “Should this transaction proceed, we would expect AMC to issue a portion of its authorized APE shares in cash to repay the majority of its outstanding debt, making AMC a more attractive long-term investment.”
It would also allow AMC to reinstate its quarterly dividend much sooner than it otherwise would have, Reese added.
Wedbush has an underperform rating and $4 price target for AMC.
See now: How one investor applied lessons from the meme stock frenzy to blockchain and NFTs
AMC will issue an APE dividend for each of its nearly 517 million shares outstanding, according to chief executive Adam Aron. “Issuing tradable AMC preferred stock units only to our shareholders clarifies who is included in our current shareholder base,” he said in the statement.
The company has faced unsubstantiated Internet conspiracy theories that there are millions of synthetic AMC shares outstanding, as well as calls for a stock recount, according to a Wall Street Journal report.
The company, which issued an “I own AMC” NFT in January, will also issue an “I own APE” NFT to shareholders.
Speaking on a conference call to discuss the results, CEO Aron said AMC has the option to issue more APEs in the future.
AMC also released its second-quarter results after the market close, reporting a drawdown loss that beat expectations and revenue in line with analysts’ forecasts.
“Attendance trends have benefited from a compelling blockbuster slate and consumer demand for out-of-home experiences,” Benchmark analyst Mike Hickey wrote. “We believe the domestic box office can generate growth in a recessionary scenario.”
“AMC has maintained market share gains over its pre-pandemic average as it improves its footprint both domestically and internationally,” Wedbush’s Alicia Reese wrote. “Additionally, AMC is doing well despite macro headwinds driving up dealership costs, utility costs and wages.”
Speaking on the conference call to discuss the results, AMC CEO Aron said there was a “shortage” of new big movie titles released in August and September, adding that “things are going slow down for several weeks”. However, that will change in the fourth quarter, with a slew of big movies. These include Jamie Lee Curtis in ‘Halloween Ends’, Julia Roberts and George Clooney in ‘Ticket to Paradise’ and Tom Hanks in ‘A Man Called Otto’ as well as sequels to ‘Black Panther’, ‘Shazam’ and ‘Avatar’. .”
See now: AMC may have been a darling of meme stocks, but weakness in some key areas has put the company on shaky ground
“Similarly, the movie slate for calendar year 2023 should also put a smile on our faces,” he added. “We look forward to the fourth quarter of 2022 and look forward to calendar year 2023 with absolute joy.”
AMC’s stock has risen 17.9% over the past three months, but is still down 36.3% since the start of the year, while the S&P 500 SPX index,
fell 0.1% in the last three months and lost 13.1% this year.
Of seven analysts polled by FactSet, three have a hold rating and four have a sell rating on AMC.