In theory, it shouldn’t matter how or why AMC Entertainment Holdings (NYSE: AMC) finally hit its double-digit stock for the first time in more than a year on Wednesday. The multiplex operator has raised more than $ 1.9 billion since April last year, and a fluctuating share price would be an ideal opportunity to increase a little more liquidity in pre-pandemic prices.
It didn’t work like that. AMC announced on Wednesday that it sold 63.3 million shares as part of its stock market program. The problem is that it sold the newly printed stock on Monday at an average price of $ 4.81. He raised $ 304.8 million in the process. If the country’s largest cinema chain had planned to sell its shares near the close of Wednesday’s trading session, those same 63.3 million shares could have raised more than $ 1.2 billion. Sometimes 48 hours it’s more than just an Eddie Murphy and Nick Nolte film. Sometimes, not waiting 48 hours can be a $ 900 million error.
Image source: Getty Images.
Let’s get the reel
The good news here is that AMC felt it had enough liquidity before Monday’s stock sale to go deep in 2021. It would take a few things to work, including its forecast of future levels of attendance and an accelerated vaccination process . Adding more than $ 300 million in new money to this pot gives it more room for maneuver if media stocks push more theatrical releases, customers don’t come back immediately, or vaccines make recipients hate the taste of butter popcorn.
Monday also doesn’t have to be the last time AMC accesses the stock markets to get more money for concessions. It would not be a bad idea to raise as much money as you can now with your double digit stock. It may well profit from the food frenzy.
Most investments suffer a blow after the sale of shares. It is a dilutive movement. But that doesn’t necessarily apply to that particular craze. Shares are likely to drop to single digits when speculators move on, no matter how many additional stocks are printed now. Unless there is a dramatic change in the fundamentals of AMC, stocks will eventually fall. Raising money does not improve the fundamentals. Incremental liquidity gives AMC more time, but no more power.
Just nine months ago, AMC was so powerful that it was threatening a studio to ban future films from their screens. The studio simply mentioned the possibility of launching films digitally at the same time as theaters in the future. Now Warner Bros. is putting all movie releases on HBO Max at the same time as its box office debut. AMC and its smaller peers no longer have the same kind of advantage they had before.
What are you waiting for AMC? Do you want to make another $ 900 mistake? Of course not.