AMC said Tuesday that it will scrap a controversial proposal to issue up to 25 million new shares of its surging stock, citing a mixed response to the idea from investors.
The world’s largest movie-theater chain — which has been a key beneficiary of this year’s “meme stock” frenzy — said in a securities filing that the plan has been withdrawn from its annual meeting set for July 29 and that it wouldn’t propose another share sale until next year at the earliest.
The news sent shares of AMC up nearly 6 percent in early Tuesday trades. The stock was recently up 0.6 percent at $52.31.
AMC chief executive Adam Aron also tweeted out the announcement on Tuesday, saying: “It’s no secret I think shareholders should authorize 25 million more AMC shares. But what YOU think is important to us. Many yes, many no. AMC does not want to proceed with such a split.”
AMC had been seeking shareholder approval to sell 25 million shares at some point next year in order to fund potential value-creating investment opportunities, as the company put it. But Aaron emphasized that the plan would be “tabled.”
Like GameStop, AMC’s stock has been a favorite of traders using platforms like Reddit to boost their stock picks. Wild gains in its stock price, which to date has risen more than 2,350 percent this year, helped AMC stave off bankruptcy as the coronavirus pandemic all but destroyed its business.
AMC board members have cashed in on the stock jolt. Last month, three members of AMC’s board of directors each sold off shares worth more than $800,000, while two more members sold shares worth more than $700,000 per director.
Around the same time, AMC had a flurry of announcements of new stock issuances, and warned investors of market volatility and the high “risk” of losing their money if they bought the stock.