This Thursday, AMC Entertainment raised $587 million through an issuance of new shares. It was the seventh time in the last nine months that the company had issued new shares, raising a cumulative total of $2.2 billion. After the new shares were issued, the company’s share price fell 18%, from $72.62 to $51.34 per share. It is common for a company’s per share price to decrease after selling new shares, which dilutes the equity ownership of existing shareholders. On the other hand, even after this drop, AMC stock is trading up 2,850% from early in the year, when shares were trading briefly at just under $2 per share when many market watchers were predicting an imminent bankruptcy filing by the world’s largest exhibitor.
Many have praised AMC’s CEO Adam Aron for navigating successfully through the troubled waters of the pandemic, including reaping benefits from the wild fluctuations in the company’s stock. They have rewarded hordes of retail investors that have stepped up to the challenge of #SaveAMC by promising future dividends and offering free popcorn at the theatre. This perk also addresses one of the key challenges facing exhibition, enticing moviegoers to return to cinemas where they can enjoy Hollywood’s newest releases on the big screen. A rapid recovery for the box office will greatly enhance the long-term prospects for AMC and other exhibitors.
After a precarious year, AMC appears to be well on its way back to a position of stability, even considering expanding its footprint through acquisition of new theatres, including negotiations to take over the recently closed Pacific Theatres and Arclight Cinemas in coveted Southern California markets.
See also: How Much Will the Meme Stock Surge Help AMC Theatres in the Long Run? (The Wrap)