It’s a pretty mixed day in the stock market on Monday. While the S&P 500 is still up about 35 basis points on the day, it’s suffering a hard fade from the morning high. However, that’s not the case for AMC Entertainment (NYSE:AMC). AMC stock is at its session high and up more than 20% so far today.
What’s driving the gain?
Early last week it was reported that a lawsuit was attempting to delay an upcoming shareholder vote. The admittedly complex situation has several developments in play, but it mainly focuses on a vote for two key events.
The first would be a vote on whether to convert AMC Entertainment Preferred Equity Units (NYSE:APE) — better known as APE stock — into common stock. The second vote was for a 1-for-10 reverse stock split.
Now, it’s being reported that a Delaware court said it will hold a preliminary injunction hearing in April to block the shares’ conversion into common stock.
That said, according to Seeking Alpha, “The injunction hearing is set for April 27. The March 14 vote on the conversion of the shares will be allowed to take place, according to a court filing signed by Vice Chancellor Morgan T. Zurn of the Delaware Court of Chancery. The hearing originally set for March 10 was canceled.”
What’s Next for AMC Stock?
AMC stock is scorching higher on the news. While shares did initially rally on the news in December that the company would raise more funds and reverse-split its stock, the recent rally is obvious. That’s as investors cheer the fact AMC stock isn’t being diluted with the APE conversion — at least, not yet.
While it appears shareholders will be able to vote on the conversion, the court will have a deciding role in the outcome in late April.
For now though, it doesn’t seem to matter to the bulls. At today’s high, AMC stock was up more than 32%. In fact, it has now rallied in three straight weeks, almost doubling off the February low.
Could the rally continue? According to Fintel, roughly 25% of AMC stock is currently sold short. That’s not the highest short interest in the world. However, it’s certainly enough to keep a little fuel on the fire if bulls choose to bid this name higher.
On the date of publication, Bret Kenwell 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.
