In theory, it should not matter how or why not AMC Entertainment Holdings (NYSE: AMC) finally got its stock in double digits on Wednesday for the first time in more than a year. The multiplex operator has raised more than $ 1.9 billion since April last year, and a live stock price would be the ideal opportunity to raise more liquidity at pre-pandemic price points.
It did not work that way. AMC announced on Wednesday that it was selling 63.3 million shares as part of its stock market program. The problem is that it pushed out the newly printed shares on Monday at an average price of $ 4.81 per share. It raised $ 304.8 million in the process. If the country’s largest film chain had determined its share sale by the end of Wednesday’s trading, the same 63.3 million shares could have raised more than $ 1.2 billion. Sometimes 48 hours is more than just an Eddie Murphy and Nick Nolte movie. If you do not wait 48 hours, it could be a $ 900 million mistake.
Image Source: Getty Images.
Let’s get pulley
The good news here is that AMC had enough liquidity before Monday’s share sales to go deep into 2021. It will need a few things to go right, including its forecast for future attendance levels and an intensified vaccination process. The addition of more than $ 300 million in new money in the pot gives more room if media supplies push back more theater releases, customers do not return immediately, or if the vaccines make the taste of buttered popcorn hate.
Monday also does not have to be the last time that AMC utilizes the stock markets for even more concessions than money. It would not be a bad idea to raise as much money as it can be now with its double digits. It might as well make money for the nutrition frenzy.
Most investments get hit after the sale of shares. This is a dilutive move. But that does not necessarily apply to this particular mania. The stock is likely to fall back to the single digits when the speculators move in, no matter how many additional stocks it now expresses. Unless there is a dramatic shift in the fundamentals at AMC, stocks will eventually fall. Raising money does not improve the fundamentals. Incremental liquidity buys AMC more time, but it no longer produces power.
Just nine months ago, AMC was so powerful that it threatened a studio with the ban on future films. The studio simply mentioned the possibility of digitally releasing films in the future at the same time as theaters. Now Warner Bros. each theatrical series on HBO Max at the same time with the premiere of the box office. AMC and its smaller counterparts no longer have the same kind of leverage as before.
What are you waiting for AMC? Do you want to make another $ 900 mistake? Of course not.