The stock surged 20% on the news, and Murdick sold all of its stake that same day, telling clients shares were “massively overvalued,” according to Bloomberg. The problem for shareholders is that this results in potentially massive dilution down the road. Converting these preferred units to common stock could increase the existing share count by nearly threefold, which would likely kill per-share investment returns barring a remarkable recovery by AMC’s business. AMC Entertainment Holdings, Inc owns, operates, or has an interest in cinema theatres in the United States and Europe but has also expanded into digital and streaming media. In 2000, the company partnered to offer the first online ticket sales and expands it to all theaters, even Empire 25 in New York, the world’s busiest movie theater. In regard to market dominance, AMC Entertainment operates 22 of the US 50 busiest movie theaters and 4 of the top 5.
It’s still worth $6 — less than the $10 price at which investors bought shares. Ironically, the more shares the company sells above intrinsic value, the closer intrinsic value will move toward the sale price, but it will never exceed that value. AMC Entertainment Holdings Inc. will report third-quarter results after market close Wednesday amid signs that the cinema industry is bouncing back from the devastation wrought by the COVID-19 pandemi… AMC Entertainment Holdings Inc AMC is set to report third-quarter earnings Wednesday.
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Investors should closely follow theater attendance over the coming quarters, which likely must be at least comparable to pre-pandemic levels for AMC to generate cash flow over the long term. The company has $1.1 billion in available liquidity (cash plus open credit lines), so it does have time to right the ship. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.