AMC shares over 30% of tank as Regal Cinemas owner warns of potential bankruptcy

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The AMC 25 and Regal Cinemas on 42nd Street in Times Square in New York City.

Richard Levin | Corby | Getty Images

Shares of theater chain and meme-shopping favorite AMC fell sharply on Monday as the struggles of a rival company appeared to weigh on the stock.

AMC was down more than 30% in premarket trading, building on a loss of more than 26% last week. The drop comes as rival Cineworld said on Monday it was considering filing for bankruptcy.

After Cineworld issued a liquidity stance warning last week, AMC CEO Adam Aron said in a statement that “we remain confident about AMC’s future” and that the company was ” pretty optimistic” about upcoming movies in Q4 and 2023.

Even though 2022 has seen big cinematic hits like “Top Gun: Maverick” and studio execs have signaled interest in returning to theaters instead of streaming-only releases, the US box office remains well below its levels. before the pandemic.

AMC reported more than $5 billion in long-term debt at the end of the second quarter. This total climbs to more than $10 billion when including lease obligations and other long-term liabilities.

A new preferred stock dividend from AMC could also impact trading. The theater chain’s “APE units,” a tool for the company to potentially raise additional funds in the future, are set to begin shipping on Monday. The new share class resembles a stock split in some respects.

“Remember that with APE seeing its first trade on the NYSE sometime tomorrow morning, the value of your AMC investment will be the combination of your AMC shares and your new APE units. One AMC share plus one new APE unit added together – compared to just one AMC share before,” Aron wrote on Twitter on Sunday.

The recent decline in AMC shares coincides with the sharp reversal of Bed Bath & Beyond. Both names have become meme stocks, with a large percentage of retail investors and social media followings. Bed Bath & Beyond fell more than 40% on Friday after activist investor Ryan Cohen revealed he had sold his entire stake in the business.

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