AMC Falls 15% After Firm Announces Plan to Sell $350M Worth of Shares
AMC Entertainment's shares fell more than 15% on the announcement of a $350 million stock offering.
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AMC (NYSE: $AMC) reported better-than-expected third-quarter earnings and revenue on Wednesday, with the company swinging to profit in the most recent period. However, the stock did not attract bullish pressure despite robust results. Instead, AMC’s shares nosedived on Thursday on the news of another stock offering worth $350 million.
AMC’s Second Stock Offering in Two Months
Shares of AMC crashed 15% at the market open on Thursday after the cinema chain operator announced plans to offer $350 million worth of Class A shares for sale. This is AMC’s second stock offering in two months.
To execute the sale, AMC entered into an equity distribution agreement with several banks, including Citigroup, Barclays Capital, Goldman Sachs, and B. Riley Securities.
“In accordance with the terms of the Distribution Agreement, we may, through our sales agents, offer and sell from time to time our Class A common stock having an aggregate offering price of up to $350,000,000.”
– AMC said in the prospectus.
The company said it may sell the shares in at-the-market (ATM) offerings, or through block trades. In the filing, AMC also warned investors about recent fluctuations in its stock price “accompanied by reports of strong and atypical retail investor interest, including on social media and online forums.”
“Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.”
– it noted.
The move comes roughly two months after AMC sold 40 million shares. Like now, the previous announcement also triggered a sharp stock price decline.
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AMC Posts Impressive Q3 Earnings
The filing for a share offering follows AMC’s Q3 financial report, which exceeded analysts’ estimates on top and bottom lines.
Most notably, the report showed that the movie theater operator swung to a net income of $12.3 million in the third quarter, of 8 cents per share, representing an impressive rebound from last year when it reported a net loss of $226.9 million.
Excluding nonrecurring items, the company posted a loss per share of 9 cents, significantly smaller than the estimated loss of 25 cents per share. Revenue came in at $1.40 billion, up 45.2% year-over-year and above the consensus estimates of $1.26 billion.
The remarkable results did not have a meaningful impact on the stock’s price in the after-hours trading session on Wednesday, suggesting that AMC may need to deliver more consistent performance to regain investors’ trust. After today’s decline, its stock has fallen by over 70% year-to-date.
In your opinion, what will it take for AMC’s stock to return to winning days? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
