The Stock of AMC Fell 3.1% Premarket After Closing at a Record Low

AMC Entertainment Holdings Inc. faced a 4.2% decline in premarket trading on Thursday, following a sharp drop in its stock price to a historic low during the previous trading session.

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The shares of this movie-theater chain, which has garnered attention as a meme-stock favorite, concluded Wednesday's session with a significant decline of 36.8%, closing at $8.62. This substantial drop came in the wake of AMC's filing of a prospectus for the potential sale of up to 40 million shares. Notably, AMC's prior record-low closing price stood at $10.73, recorded on January 5, 2021.

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During Wednesday's trading session, AMC witnessed an exceptionally high trading volume, with 84.99 million shares changing hands, a stark contrast to its 65-day average of 8.71 million shares.

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The proposed sale of up to 40 million shares represents a substantial portion, up to 7.7%, of AMC's total outstanding common shares, which amounted to 519.2 million as of August 4.

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In its filing, AMC disclosed its intention to utilize the proceeds from potential share sales to strengthen its liquidity, repay, refinance, redeem, or repurchase existing debts, and for general corporate purposes.

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Leading up to Wednesday's decline, AMC's stock had experienced a notable 25% increase over the four trading sessions. This rise was attributed to increased movie attendance and the company's recent announcement that it would serve as the theatrical distributor for "Taylor Swift: The Eras Tour." On Friday, AMC reported record-breaking advance ticket sales of $26 million for the concert film, set to premiere on October 13.

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AMC CEO Adam Aron expressed enthusiasm, stating, "We are selling at a record-setting pace, but we still have great seats," in a tweet on September 2.

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The anticipation surrounding "Taylor Swift: The Eras Tour" is viewed as a positive development for the movie industry, particularly given the challenges posed by ongoing strikes involving writers and actors. Benchmark analyst Mike Hickey commented, "The optimism comes as a boon to the film industry, which is currently navigating delays due to ongoing writers and actors strikes. Swift’s concert film has generated enormous interest, leading industry experts to speculate that it could ultimately gross $150 million or more domestically."

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Over the past three months, AMC's stock, which underwent a 1-for-10 reverse stock split at the end of August, has experienced a significant decline of 79.1%. This contrasts with the S&P 500 index's gain of 4.6% during the same period.

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