AMC Entertainment (NYSE:AMC) stock is falling on Wednesday as the company prepares for a stock conversion on Friday.
That’s when the movie theater chain will convert shares of AMC Entertainment (NYSE:APE) stock into shares of AMC stock. Investors will also note that AMC Entertainment is planning a reverse stock split tomorrow.
AMC Entertainment first started offering APE shares last year as a way to raise funds and pay off debt. However, it decided to convert APE shares into AMC stock, which didn’t go over well with investors. It even triggered an investor lawsuit against the company that delayed its conversion plans.
What’s Next For AMC Stock
The first thing worth noting is the reverse stock split. This will have the company consolidating down 10 shares of AMC stock into a single share. That will boost the price of its stock while decreasing outstanding shares ahead of the dilution that will follow when the APE conversion goes into effect.
And that dilution isn’t sitting well with long-time investors in AMC stock. Estimates place it at about 90%, which is massive. As such, it makes sense that AMC stock has been falling recently as investors sell shares.
AMC Entertainment already saw some 100 million shares change hands yesterday and another 16 million have traded this morning. For the record, its daily average trading volume is about 33 million shares.
AMC stock is down 22% as of Wednesday morning and is down 35.1% since the start of the year.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
