AMC 25 and Regal Cinemas on 42nd Street in Times Square in New York.
Richard Levine | Corbis | Getty Images
Shares of theater chain and meme dealer favorite AMC fell sharply on Monday as the struggles of a rival company appeared to weigh on the stock.
AMC fell more than 30% in premarket trade, building on a loss of more than 26% last week. The decline comes as rival Cineworld said on Monday it was considering filing for bankruptcy.
After Cineworld issued a warning about its liquidity position last week, AMC CEO Adam Aron said in a statement that “we remain confident in AMC̵[ads1]7;s future” and that the company was “quite optimistic” about movies coming in the fourth quarter and in 2023.
Although 2022 has seen big movie hits like “Top Gun: Maverick” and studio executives have signaled an interest in swinging back to theaters instead of streaming-only releases, the U.S. box office remains well below its pre-pandemic levels.
AMC reported more than $5 billion in long-term debt at the end of the second quarter. This sum rises to more than $10 billion when it includes lease obligations and other long-term liabilities.
A new preferred stock dividend from AMC could also affect trading. The theater chain’s “APE units,” a tool for the company to potentially raise additional cash in the future, are slated to begin trading on Monday. The new share class resembles a share split in some ways.
“Remember, when APE sees its first trade on the NYSE sometime tomorrow morning, the value of your AMC investment will be the combination of your AMC shares and your new APE units. One AMC share plus one new APE unit added together — compared to just one AMC stock previously,” Aron further wrote Twitter on Sunday.
The recent decline in AMC’s stock coincides with the sharp reversal for Bed Bath & Beyond. Both names have become meme stocks, with a large percentage of retail investors and social media followers. Bed Bath & Beyond fell more than 40% on Friday after activist investor Ryan Cohen revealed he was selling his entire stake in the company.