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what happened
of shares AMC Entertainment (asset management company -69.26%) It fell as much as 40.3% in early trading on Monday after the stock dividend was completed.management release AMC Preferred Stock (NYSE: APE) was offered to shareholders on a 1-for-1 basis over the weekend, effectively resulting in a 2-for-1 stock split.
so what
AMC completes what is known as a stock dividend, which means that investors receive dividends not paid in cash, but in stock. In this case, the stock is AMC Preferred Stock, which has the same voting rights and financial benefits as AMC’s traditional stock.
Investors who held AMC shares on August 19, 2022 received their shares of AMC’s preferred stock today after the market closed. The price of these two combinations will be similar to AMC’s price at Friday’s close.
It’s a puzzling move by AMC, but the reason is that the company agreed not to issue additional AMC stock as part of a previous fundraising. But it could issue more APE preferred stock to raise money.
How to do
AMC’s move itself makes sense, but the industry as a whole doesn’t look solid.The world learned this morning that the second theatre operator movie world Is considering filing for bankruptcy protection. This does not bode well for the future of the business and should be a warning about the need to raise capital in the future. I don’t like AMC’s business right now, and given the potential for dilution in APE stock, this is a stock I’m staying away from.
Travis Hoym No positions in any of the above stocks. The Motley Fool has no positions in any of the aforementioned stocks.variegated fools have one Disclosure Policy.
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