AMC (NYSE:AMC) stock closed up a staggering 33% today on several pressing news items, including impressive numbers from one of Hollywood’s latest big releases: Barbie.
Over this past weekend, AMC enjoyed its strongest weekend opening since 2019. The movie theater company held inaugural showings of both Barbie and Oppenheimer, bringing in more than 7.8 million viewers across domestic and global showtimes, between Thursday and Sunday. In the U.S. the theater chain even set a new post-reopening single-day attendance record on Saturday. Perhaps unsurprisingly, AMC also revealed it recorded its second-highest food and beverage sales ever in the U.S.
As you might imagine, excitable AMC Chief Executive Adam Aron shared his enthusiasm at the brow-raising theater attendance.
“What a fabulous weekend for moviegoers at AMC’s movie theatres in the U.S. and abroad. AMC sends an enormous thank you and congratulations to Greta Gerwig, Margot Robbie, Ryan Gosling, and the entire team at Warner Bros., and to Christopher Nolan and the team at Universal Pictures. They’ve demonstrated that well-made, well-marketed films that captivate audiences can open on the same weekend and both enjoy great success.”
AMC Stock Soars on Stock-Conversion Setback
Interestingly, AMC may also be rising on a court ruling against the blockbuster company. Indeed, on Friday, the Delaware Chancery Court ruled against the proposed conversion of AMC Entertainment Preferred Equity Units (NYSE:APE) into AMC common stock. It seems the proposed move was decisively unpopular with investors, perhaps for good reason.
“Part of what swayed the judge was the nearly 3,000 individuals who sent in letters to sway the opinion, presumably out of concern for further share dilution,” wrote Wedbush Vice President of equity research, Alicia Reese.
In an open letter Aron posted to his personal Twitter account Sunday, the CEO implored investors to reconsider the company’s efforts.
“In leading AMC through this once-in-a-century pandemic and its aftermath, I have been driven by this over-arching goal: Do not let AMC fall into financial ruin, ensure that AMC survives, put AMC on a path to eventually thrive. … AMC must be in a position to raise equity capital. I repeat, to protect AMC’s shareholder value over the long term, we MUST be able to raise equity capital. That is especially the case now with the added uncertainty caused by the writers and actors strikes, which could delay the release of movies currently scheduled for 2024 and 2025. If we are unable to raise equity capital, the risk materially increases of AMC conceivably running out of cash in 2024 or 2025, or of AMC being unable to
satisfactorily refinance and stretch out the maturity of some of our debt (which is required of us beginning as early as 2024).”
Despite the potential consequences of the court ruling, it seems investors are pleased with the decision. Indeed, share dilution has been a major concerns for proponents of the sometimes meme stock.
AMC stock is up 48% year to date, but remains down over 60% over the past year.
On the date of publication, Shrey Dua did not hold (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.
