WTF Are AMC Theatres’ ‘APE’ Dividends?

A breakdown of AMC, meme stocks, and Adam Aron's colorful persona.
AMC Theatres lost over $500 million in the first quarter of 2021.
AMC Theatres
Anne Thompson

AMC Theatres CEO Adam Aron isn’t moving away from his very online persona. The executive on Thursday announced AMC will issue dividends in the form of preferred equity stock units. The AMC Preferred Equity units will trade on the New York Stock Exchange under the ticker symbol APE — a convenient acronym and a nod to an inside joke among the Reddit users who eagerly snatched up AMC stock during the troubled times of the early pandemic.

“Today, we pounce,” Aron said. “With the backdrop of AMC’s Q2 favorable earnings it is now time for us to take decisive and even valorous action — look up that word in the dictionary, ‘valorous.'”

Huh? If you’re confused — either by the slang, the securities terms, or Aron’s performative performance — that’s OK. Here’s a breakdown of what the hell Aron announced Thursday.

On August 19, AMC will issue one preferred equity stock unit for each of its 560.82 million shares. So if you have two AMC shares, you’ll be issued two of these new units; they’ll begin trading three days later and will carry the same voting rights as the existing common shares. The move gives AMC an alternative to the less-palatable option of issuing more actual  shares; the company will be able to sell some of the new units to raise funds.

“This is a major step forward for AMC. In my view, probably the biggest favorable development for our company in all of the calendar year ’22, both looking back and looking ahead,” Aron said. “We believe this is truly great news for AMC and not-such-good news for those prophets of doom who may be rooting against us.”

That colorful commentary is part of a public persona Aron conjured up over the last two years as part of a strategy of courting what Wall Street calls retail investors: everyday people, rather than institutions, who own AMC stock. Aron says 90 percent of AMC shares are owned by retail investors. Some, but certainly not all, of those are shareholders who snatched up AMC stock during the pandemic, fueled by posts on Reddit as part of the “meme stock” scene.

That’s where “APE” comes from: It’s an inside joke for members of Reddit’s r/WallStreetBets community. In addition to AMC investment, members of that forum most famously drove a frenzy around GameStop stock last year; they managed to boost share prices of the retailer and squeeze out short-selling hedge funds.

So Aron’s talk of “prophets of doom” is a shot against those Wall Street fat cats who bet against AMC’s success, as part of his strategy of courting the underdog-rooting meme-stock investors. In addition to “apes,” members of the community also refer to themselves as “degenerates.”

Those “apes” may have saved the largest exhibitor chain in the U.S. These APEs are essentially a freebie, though Aron said not to be surprised if the price of AMC common shares drop in response to the launch of APEs. AMC shares dropped about 10 percent in after-hours trading Thursday; the price was $18.66 at the close of trading.

It’s all part of the club-like branding that Aron has envisioned for AMC and its investors. The company previously launched exclusive perks for investors like free concessions and NFTs, while Aron is active on Twitter engaging with the dedicated community of retail shareholders. He’s pretty extra there too; Aron tried to get #TodayWePounce trending last night.

AMC reported net sales of $1.16 billion last quarter, compared to $444.7 million in Q2 2021. Losses decreased, from $344 million in Q2 2021 to $121.6 million in Q2 2022, buoyed by the performance of “Top Gun: Maverick.”

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