AMC (AMC) Entertainment stock tanked more than 20% on Wednesday morning after the cinema chain announced plans to sell up to 40 million shares.
The company said it plans to use the proceeds “to bolster liquidity, to repay, refinance, redeem or repurchase its existing indebtedness,” and general corporate purposes.
Investors anticipated a share sale following last month’s court approved settlement which allowed the company to convert AMC’s special preferred shares, known as (APE) units, into AMC common stock.
“AMC should now be able to raise additional equity capital,” AMC CEO Adam Aron wrote in a letter to investors following the court approval. Shares underwent a 10 for 1 reverse split in August prior to the conversion.
AMC, also known as an original flagship meme stock, has played into vocal support from retail investors since 2021. The company was challenged during the pandemic lockdowns, and has tried to reinvent itself as more than a traditional theater chain in an era of streaming at home videos.
Last Thursday, the AMC spiked as much as 9% after the company announced the upcoming concert film of Taylor Swift’s Eras Tour starting Oct. 13.
In July, AMC had a blowout opening weekend for “Barbenheimer.” The double feature combination of “Barbie” and “Oppenheimer” resulted in AMC’s best single-day performance since before the pandemic.
AMC’s most recent quarter showed revenue of $1.35 billion, higher than analysts’ projections for $1.29 billion. The company’s $0.00 earnings per share also beat Street analysts expecting a loss of $0.04 per share.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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