AMC Launches Shareholder Rewards Program After Raising Billions From Retail 'Apes'
AMC shares continue to power higher in premarket trading Wednesday after Muldrick Capital bought, and then abruptly turned around and sold, 8.5MM shares of the company's stock almost entirely to AMC's army of retail bagholders (members of which proudly refer to each other as "apes" on Reddit, Facebook, Twitter and elsewhere).
Let me address the smart raising of equity capital. I believe one of the best things $AMC did in 2021 was to raise $428 million a few weeks ago, at $9.94 per share. Rather than dilution affecting AMC badly in the short term, as some feared, we greatly strengthened AMC. {1 of 5}
— Adam Aron (@CEOAdam) June 1, 2021
We are seeing some terrific opportunities to pick up important theatres from other faltering chains. This can be a real way for AMC to grow again, creating immediate value for AMC shareholders. But we will need more cash to get these theatres under lease. {2 of 5}
— Adam Aron (@CEOAdam) June 1, 2021
Today, we announced selling 8.5 million AMC shares at a price of about $27.12 each. 8.5 million shares is less than 1.7% of our outstanding shares, and is a small portion of our typical trading volume. But it gives us $230.5 million of cash to use primarily to grow AMC. {3 of 5}
— Adam Aron (@CEOAdam) June 1, 2021
First in our sights are the strongest Arclight/Pacific theatres that will not re-open due to pandemic pressures. No one is out of the woods yet, but we like AMC’s improved liquidity, the increases of vaccinated people and the imminent release of new blockbuster movies. {4 of 5}
— Adam Aron (@CEOAdam) June 1, 2021
In our view, this is not mindless dilution, but rather this is very smart raising of cash so that we can grow this company... to many of you on Twitter, to grow YOUR company. Watch out naysayers, $AMC is going to play on offense again. Here we come! {5 of 5}
— Adam Aron (@CEOAdam) June 1, 2021
Now, after CEO Adam Aaron explained in a series of tweets that this was not "mindless dilution, but rather...very smart raising of cash so that we can grow this company...", Aaron and his firm have just launched a unique new program to engage the retail traders who now own more than 80% of the company's float as the company takes steps to keep them happy as management grapples with the fact that the company is going to need to raise even more capital (on top of the billions of dollars it has raised in equity issuance this year).
In a press release that hit just minutes ago, AMC announced that it would launch a "new communication initiative" that will put AMC "directly in communication with its extraordinary base of enthusiastic and passionate individual shareholders to keep them up to date about important company information and to provide them with special offers."
The program will allow AMC's 3MM retail shareholders to "self identify" through the company's website, where they will receive "special offers" and "company updates" including an initial offer of a free large popcorn at any AMC-owned theater in the US. More benefits and offers will come, the company added.
Aaron followed up the press release with a tweet announcing the program.
Today, AMC and I launch an innovative effort to communicate often with AMC shareholders. #AMCInvestorConnect gets you AMC Stubs benefits and ***SPECIAL SHAREHOLDER REWARDS*** for those who patronize AMC Theatres in the U.S. Sign up is completely free at https://t.co/b5l62CQlD0 pic.twitter.com/h42VGCCD1I
— Adam Aron (@CEOAdam) June 2, 2021
Just minutes before Aaron's announcement, we quipped that AMC should only allow shareholders into its theaters.
AMC should only allow shareholders to enter its theaters
— zerohedge (@zerohedge) June 2, 2021
That was fast pic.twitter.com/kF4w9rDUmJ
— zerohedge (@zerohedge) June 2, 2021
However, giving back to shareholders makes sense since AMC is using their money to shed debt, strengthen its capital structure all while creating an enormous cushion for cash-burn. Because AMC knows that this army of retail capital has been a godsend to its business, especially as pretty much all of its big institutional backers, including China's Dalian Wanda, have exited their positions, leaving management firmly in control at the helm of a retail army. Now, the firm needs to do whatever it can to keep the retail bagholders shareholders in line, because yesterday's capital raise via Muldrick probably won't be AMC's last.
AMC shares have given back some of their gains overnight, but are still up ~200% from a week ago.
In other industry news, Goldman Sachs analysts cut both Imax and Cinemark to sell from neutral, saying a sharp rebound in US box office sales is already priced in. However, they didn't say anything about AMC.
Read the full press release below:
AMC Entertainment Holdings, Inc. (NYSE: AMC) (“AMC” or “the Company”), announced today that it is launching AMC Investor Connect, an innovative, proactive communication initiative that will put AMC in direct communication with its extraordinary base of enthusiastic and passionate individual shareholders to keep them up to date about important company information and to provide them with special offers. Over the last several months, AMC has seen its retail shareholder base grow beyond 3 million owners. With this sizable number of retail shareholders, AMC is taking a groundbreaking new approach to investor relations and investor communications.
AMC Investor Connect launches in conjunction with the preliminary proxy statement for AMC’s July 29 annual meeting of shareholders, which is expected to be filed publicly on June 3, 2021.
Commenting on this novel step of creating a communication platform to directly reach the millions of AMC’s shareholders, AMC CEO and President Adam Aron said, “AMC Investor Connect will put our Company in direct communication with a retail investor shareholder base that owned more than 80% of AMC at last count. Many of our investors have demonstrated support and confidence in AMC. We intend to communicate often with these investors, and from time to time provide them with special benefits at our theatres. We start with a free large popcorn on us, when they attend their first movie at an AMC theatre this summer.”
Aron added, “During my five-plus year tenure as CEO at AMC, I’ve taken great pride in the relationships I have forged with AMC’s owners. With AMC Investor Connect, that effort in relationship building will continue apace even if our shareholders now number in the millions. After all, these people are the owners of AMC, and I work for them.”
Beginning today, shareholders can sign up to receive special offers and investor updates by registering at amctheatres.com/stockholders. Investors who sign up starting today and in the coming weeks will be awarded with an initial free large popcorn usable this summer when attending a movie at an AMC theatre in the United States. The offer will be made available in their AMC Stubs rewards account.
Investor benefits through AMC Investor Connect include:
- Shareholder-exclusive promotions, including free or discounted items, and invitations to special screenings.
- Communications directly from CEO & President of AMC Theatres, Adam Aron.
- Other interesting information about AMC and its place in the movie eco-system.
To sign up for AMC Investor Connect, an investor must be or enroll as an AMC Stubs member, which includes AMC Stubs Insider, AMC Stubs Premiere and AMC Stubs A-List. AMC Stubs Insider is free to join and includes additional perks and rewards. Additional information about AMC Stubs and how to sign up can be found here: amctheatres.com/amcstubs.
Investors anywhere in the world may sign up for AMC Investor Connect, but initially the free popcorn launch reward can only be redeemed at a U.S. theatre. AMC is currently reviewing its ability of extending the redemption of future offers at its international theatres on a country-by-country basis.
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