AMC Entertainment Holdings Inc. Sees 2% Rise in Stock Amid Reverse Split and Conversion

AMC Entertainment Holdings Inc., the popular movie-theater chain and meme-stock favorite, experienced a 2% increase in its stock prices during premarket trading on Friday. This rise came as AMC implemented a reverse 1-for-10 split of its common stock and converted its AMC Preferred Equity (APE) units into AMC common stock.

The reverse stock split took place on Thursday, and the conversion of APEs into AMC common stock is expected to occur on Friday. As a result of this conversion, the APEs will cease trading and be delisted from the New York Stock Exchange.

In a form 8-K filing released late on Thursday, AMC announced that it has registered just over 6.9 million shares of Class A common stock to be issued as part of a previously announced litigation-settlement payment.

AMC’s stock had experienced a downward trend in the preceding four days, with Thursday’s session ending with a 26.7% decrease. Short interest in AMC’s float stands at 29.2%. Similarly, the APEs had a rough session on Thursday, closing with a 17.9% decrease.

The APEs were first listed on the New York Stock Exchange on August 22, 2022. This marked the latest development in an ongoing battle over stock issuances. On their first day of trading, APEs opened at $6.95 and closed at $1.44 on Thursday. The name “APE” is a reference to the investors who turned AMC into a meme stock and often refer to themselves as “apes” or part of the “ape nation.”

In a recent note, Wedbush analyst Alicia Reese raised AMC’s price target from $2 to $19, citing the resolution of AMC’s court case as a significant positive development. Wedbush expects AMC shares to stabilize around the new $19 price target after the conversion and reverse stock split. Additionally, Wedbush upgraded AMC from underperform to neutral, stating that the company is well-positioned in light of an improving industry landscape. Reese also predicted that the North American box office would see a 20% increase compared to 2022.

AMC’s journey over the past few years has been a roller-coaster ride. It went from being a struggling victim of the pandemic to becoming a popular meme stock phenomenon. Taking advantage of the steep rise in its share price, AMC tapped into equity and debt markets and raised $917 million in January 2021.