After a volatile 2022, AMC Entertainment (NYSE:AMC) looks poised for a tough 2023. The theater chain spent the final month of 2022 trending downward as bad news piled up. As InvestorPlace contributor Dana Blankenhorn reported, the risk of bankruptcy and concerns about the industry are casting a dark shadow over AMC stock. Even CEO Adam Aron’s offer to freeze his own pay drew plenty of criticism. His critics made it clear they did not approve of his offloading shares as their value decreased.
But now Aron has made it clear what his priorities are, stating that he will not be selling any more AMC stock or AMC Preferred Equity Units (NYSE:APE). Yesterday evening, he tweeted the following:
More AMC shares and APE units vested yesterday, bringing my current ownership after income tax paid to 1,097,199 AMC shares and 1,348,138 APE units (not including future vestings). I am AMC’s largest retail shareholder. I will not sell any of these any time soon. I ride with you!
— Adam Aron (@CEOAdam) January 6, 2023
This tweet is in keeping with Aron’s previous tactic of currying favor with the crowd that turned AMC into a meme stock sensation in 2021. But what does it say about the future of the company? Let’s take a closer look.
What’s Happening With AMC Stock
As can be expected, Aron’s loyal Twitter following of small-time AMC stockholders, or “Apes,” is reacting well to his announcement. However, AMC stock is not. As of this writing, it is down 2% for the day and is demonstrating significant volatility. APE, on the other hand, is in the green by just over 2% although its pattern is also highly volatile. While AMC has plunged more than 40% over the past month, APE has risen more than 55%. However, it has still lost 77% of its value since it began trading in August 2022.
Aron’s tweet hasn’t pushed AMC stock up, but it has led to a surge in social media momentum. According to data from Ape Wisdom, mentions have spiked by 24% in the past 24 hours while the number of mentioning users has increased by 29%.
We all know that the r/WallStreetBets crowd has sent stocks like AMC to impressive heights before. They will likely be more motivated than ever, as Aron is redoubling his attempts to align himself with them. His “CEO of the people” angle has never been more evident, especially since he described himself in the tweet as a retail investor.
Does that mean that he is one? It feels odd to categorize the CEO of an industry-leading company as a retail investor. Personal finance platform SoFi (NYSE:SOFI) offers the following definition:
“A retail investor is a non-professional, individual investor who invests money in their own accounts, typically through traditional or online brokerage firms. They may invest as an active investor, allocating the money and making trades on their own, or they may hire a professional, such as a financial planner or advisor, to oversee the investment decision-making process.”
That doesn’t necessarily sound like Aron, but as he isn’t an investment professional, it could technically apply. His professed faith in the company may inspire the Ape army, and it will likely lead to them doubling down on shares and vowing to never sell.
Following the Leader
Does having its CEO as a top retail investor make AMC stock a good buy? Not necessarily. While APE has rebounded lately, the entire company remains questionable at best. It has failed to innovate beyond basic merchandise, proving it may not be able to adjust to doing business in a post-pandemic economy. As InvestorPlace Assistant Financial News Writer Eddie Pan notes, its business model is geared toward a bygone era. AMC should still be ranked among meme stocks to sell, even if Aron is committed to holding it.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.