Why AMC And Its Preferred Stocks Are Up Today | Digireview

What happened

Even a blind squirrel occasionally finds a jerk, and that seems to be happening on Tuesday with movie theater chain AMC Entertainment Holdings (AMC 7.55%) and its preferred stock, AMC Preferred Equity (APE 6.12%). Both stocks were up about 6% at 11:38 a.m. ET on a day when the S&P 500 was up 48 points, or about 1.3%.

Since there’s been no news to explain the sudden move higher, put it on the occasional jerks AMC’s squirrels — or “monkeys” as they like to call themselves — found today. The theater chain’s stock often goes higher when there’s no news, only to return everything quickly. Shares are down 63% in 2022.

$20 paper airplane that creases in the stock pages of the newspaper.

Image source: Getty Images.

And then

AMC is still heavily short, with nearly 20% of its outstanding shares sold short. But with a short yield ratio of just 2.4 (anything above 7 is considered a lot), the chances of a short squeeze are negligible.

The company has become the leading meme stock these days as its investors continue to search for the mother of all short squeezes. They had pinned their hopes on AMC by creating the preferred stock to trigger the squeeze, but the combined price of the two share classes (about $9.50) places them nearly 50% below the AMC share price of $18 on the day. before the split took place.

What now

The goal of AMC Preferred Equity was to allow the movie theater chain to dilute its shares in an effort to raise additional cash if needed. With APE shares down 75% since their launch, it’s doubtful that AMC will increase as much if and when it tries.

Few major tentpole movies have been released to lure people back to theaters, and attendance figures are well below pre-pandemic levels. Both iterations of AMC stock will struggle unless the film industry bounces back.

Rich Duprey has no position in any of the listed stocks. The Motley Fool has no position in any of the listed stocks. The Motley Fool has a disclosure policy.

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