AMC, despite some noted successes over the last few years, simply can’t seem to catch a break. Possibly as AMC seems to have repeatedly failed to learn its lesson on clear communication with stockholders. After AMC again took a significant beating on the stock market this week, our Blake & Wang P.A. entertainment lawyer, Brandon Blake, takes a look at what lessons AMC needs to learn— and what sparked the sudden downturn this time.
Stock Drop After SEC Filing
Overall, AMC shares dropped by 9% in the wake of news revealed from a recent SEC filing. This filing revealed that the company intends to sell off roughly 50M in stock shares, primarily to strengthen its balance sheet and reinvest in its core business. These proceeds are also earmarked to fund its ambitious “GO Plan,” which it announced last month.
It’s likely this focus on upgrading their facilities was sparked by news that Regal, too, is looking at a luxury overhaul for 425 of its theaters to revitalize them for the new face of exhibition. While AMC has taken great strides in addressing the balance sheet issues that have plagued it since the COVID lockdowns, it still needs to address its outstanding debt burden as well. AMC currently has about 375M shares outstanding.
Anger from Investors
AMC has, however, incurred the wrath of many of its stockholders on the back of the announcement. AMC netted some publicity in the early post-COVID era as it became a core focus of the short lived “meme stock” movement. While this was its salvation at a particularly rocky time, it does mean that AMC has drifted away from private asset companies as its major shareholders into an individual investor-controlled situation since 2021. This means that its current shareholder base is not always the most experienced in the ups and downs of the stock market itself.
Current investors reacted poorly to the news, fearing that this stock divestiture would dilute their investment positions. Others feel that the move will dilute the many gains the theatrical industry has seen over a bumper Thanksgiving period. While ups and downs are the nature of the market, AMC’s stock value has dropped 21% over 2024. Clearly, it’s time to take a different approach to communicating its financial needs to its unique stockholder base, or market punishment will continue to follow.
Film and Television 