AMC Entertainment is walking back plans to ask shareholders to allow more stock sales. The meme stock’s retail investors on Reddit couldn’t be happier.
On Tuesday, AMC CEO Adam Aron wrote on Twitter that he didn’t think there was enough support from shareholders to authorize the sale of 25 million shares as soon as 2022, despite his backing.
“It’s no secret I think shareholders should authorize 25 million more AMC shares,” Aron tweeted. “But what YOU think is important to us. Many yes, many no. AMC does not want to proceed with such a split. So, we’re canceling the July vote on more shares. And no more such requests in 2021.”
Users on the AMCStock Reddit forum cheered the chief executive. A thread calling Aron the GOAT, or greatest of all time, for the decision was one of the day’s top posts. A comment in that thread said Aron “took the one thing that was dividing apes and squashed it! KING SILVER BACK BABY!!!!!”
Still, shares of AMC (ticker: AMC) closed down 3.9%, to $49.96. Fellow meme stock GameStop (GME) was down 1.6%, to $199.56. AMC stock is up 2,2256% in 2021; GameStop stock is up 959%.
In proxy materials, the company laid out several reasons why it wanted to sell the additional stock—to deploy capital to reduce debt, invest in its theaters, acquire new theater leases, and invest in attractive growth.
AMC also suggested shares could be used as currency for M&A opportunities. By withdrawing the vote on new shares, the company will lose some of its potential firepower for deal making in 2022.
While shareholders won’t vote on new share proposals before 2022, as Aron tweeted, they will vote on other issues, such as board nominees and executive compensation. The annual meeting is set for July 29. The company had 4.1 million individual shareholders eligible to vote as of June 2.
The movie chain was first targeted by Reddit users in January in part because of a large number of shares sold short by bearish investors betting on a price decline. The users hoped to trigger a “mother of all squeezes,” or MOAS, when short sellers are forced to cover their positions, driving demand for the stock. Stock sales could potentially provide more cover for short sellers and would be dilutive to existing shareholders.
“More than 80% of AMC shares are held by a broad base of retail investors with an average holding of around 120 shares,” Aron said in a June statement. “Some hold more and some hold less, however, each and every shareholder is important to AMC. Each shareholder has a critical role to play in AMC’s future by having their voice heard by voting at our upcoming Shareholder Meeting.”
Write to Connor Smith at [email protected]