AMC Entertainment (NYSE: AMC) stock fell by 5.32% due to the company said Tuesday that it plans to bolster its cash reserves through selling 43 million shares. Undoubtedly, this would have resulted in dilution to existing shareholders. The company said that the capital raised from this issuance, should be sufficient to satisfy AMC’s liquidity needs for 2021. Does this mean it will no longer sell new shares this year?
An AMC in West Hollywood. (Dania Maxwell / Los Angeles Times)
The company said that its board of directors will no longer seek stockholder approval for an increase of 500 million shares of authorized, but it's likely to reconsider a proposal to increase the number of authorized shares at some point in the future. It seems that the company's liquidity will still face great pressure in the future.
Of course, the most core question is its theater chain business. If there is an expected recovery in the patronage of movie theatres in the second half of this year, it will help the company accelerate its operating revenue growth. Currently, the number of people who have been vaccinated is growing and COVID-19 new cases are falling in the U.S., this is a good sign, restrictions lifted completely will also no longer be far away.
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