AMC Stock Drops After Reverse Split Takes Effect
deadline.comLeading exhibitor AMC Entertainment completed a 1-for-10 reverse stock split this morning, a planned move preceding Friday’s conversion of its preferred “APE” shares into common stock.
After the split, AMC shares were down 25% midway through the trading day, with volume at five times normal levels. The split means investors in the movie theater circuit get one share for every 10 shares they previously held, with the share price rising automatically as a result.
Reverse splits are generally viewed as potentially risky moves by companies in need of reviving the price of their stock. AMC shares had been in the $2 range in recent days; factoring in the split, they are now above $14.
Investors have continued to express worries about being diluted by the APE swap. When Covid shut down theaters for months, AMC Entertainment became one of a handful of meme stocks boosted by a surge of retail investors who used Reddit to co-ordinate their holdings in distressed legacy companies.
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