AMC & The Great APE Escape!
Great Ones, we all know that Wall Street has a particular disdain for the weird, unusual and peculiar.
So when AMC Entertainment (NYSE: AMC) announced earlier this year that it would issue a new class of stock under the ticker symbol “APE,” nobody was really sure what to expect.
Making matters more confusing, AMC’s APE shares would have the same voting rights as AMC stock common shares. And if that wasn’t enough, APE shares were issued as a special dividend.
Wait … what? What’s with all this monkeying around, Mr. Great Stuff?
It’s clear as mud, right?
No wonder AMC stock is off nearly 40% right before APE shares begin trading publicly.
They’re what now?
OK, let’s break this situation down for reals.
Originally, AMC wanted to issue more shares of AMC stock. But as you might suspect, the company’s board and a majority of AMC shareholders didn’t want to dilute their holdings any further.
After all, when you split a stock or issue more shares, you devalue all the shares currently in circulation.
But AMC CEO Adam Aron decided that the company’s meme stock status was too good to not take further advantage of.
Aron created a special class of shares with the same potential voting rights as AMC common stock and issued those shares as a special dividend — getting around AMC’s board, shareholders and the IRS in one fell swoop.
It seems brilliant — and it is, in a way. However, these newly issued APE shares may or may not actually have voting rights. AMC’s board and shareholders might still need to approve that part of the APE issuance.
But that’s beside the point. The point was for AMC to take advantage of its meme stock status and rake in more capital. From that point of view, APE is a success so far.
For now, AMC can issue more APE shares whenever it wants to make more money … and it can do so without shareholder or board approval.
And therein lies the rub for Wall Street. How do you value APE shares if their voting rights remain in question? Can APE shares be exchanged for AMC common stock? How do you accurately value these APE shares?
So many questions! So many questions!
Unfortunately, many of these questions will have to wait until AMC and its shareholders sort things out. But as usual, that won’t stop Wall Street from applying its own valuation … which is why AMC stock plunged nearly 40% today.
Right now, Wall Street and CEO Adam Aron are treating the APE situation as a stock split:
So one AMC share plus one APE share equals one AMC share prior to APE trading publicly. Essentially, with AMC down 40%, that would mean that APE shares make up 60% of AMC Entertainment’s valuation — which, honestly, seems kinda odd given the circumstances.
Once Wall Street figures out exactly how it feels about APE stock, I’d expect these ratios between APE and AMC shares to fluctuate a bit, but they’ll eventually settle closer to 50-50, if everything goes right.
But Wall Street isn’t alone in its confusion over APE shares. The financial media is trying to blame AMC’s 40% plunge today on rival Cineworld’s announcement that it is considering bankruptcy.
I do not doubt for a second that Cineworld’s troubles are impacting investor sentiment regarding AMC.
However, it’s a small drop in the bucket compared to the uncertainty surrounding APE shares. Furthermore, APE shares are exactly what AMC will use to avoid facing a similar fate to Cineworld.
In other words, I’m not worried about AMC filing for bankruptcy. I really like the company’s prospects going forward as the theater business returns to its pre-pandemic glory. That said, I do worry about AMC’s Aron embracing the stock’s meme status too much.
Sure, it’s a good way to make some extra cash when you need it. But meme traders are only gonna meme for so long. Let’s hope AMC has its financials sorted out by the time this easy cash cow buys the farm.
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Going: Sittin’ On The Dock Of EBay
My house is filled with this trading card crap…
Shows up in bubble wrap most every day … what I bought on eBay (Nasdaq: EBAY).
Thanks, Weird Great Stuff, now what’s the deal with eBay?
Impatient today, aren’t we? If you’re really impatient, just cut to the chase and go bid up some trading cards on eBay. The company just announced it’s buying up TCGPlayer, which is an online trading card marketplace.
The deal is valued at up to $295 million, while eBay execs had this to shout out about the buyout:
The pro? Now folks can use eBay’s somewhat user-friendly platform for high-value trading cards. The con? Well, there’s a reason why I call it “FeeBay.”
Oh, and by “trading cards,” we’re not talking about Topps or Big League Chew here. TCGPlayer focuses on cards from Magic: The Gathering, Yu-Gi-Oh!, Pokémon and other in-demand franchises.
So like … the original NFTs?
Hey, don’t start a war with the Magic: The Gathering folks now. Unlike NFTs, these types of trading cards actually have … you know … real-world value. EBay knows it’s buying up a gold mine of a platform for cards that can fetch up to thousands and thousands of dollars.
Basically, don’t bid against gamers, trading card geeks and fanatical collectors. Just … don’t.
Going: Speaking Of Bids…
Great Ones … it’s takeover time!
Oh boy! Where are we invading this time?
What? No, no, don’t get too ahead of yourself here. I’m talking boring ol’ corporate takeovers … so put down that spear you were sharpening, it’s freaking me out.
EBay’s buyout of TCGPlayer is just one more takeover in a long series of buyouts we’ve seen in the past few weeks — from Big Tech players or otherwise. And where there’s data to be mined, there’s gonna be a buyout … and Amazon.com (Nasdaq: AMZN).
I mean, who else wants your sweet, sweet personal data as much as Amazon? How about … your insurance company? Or wannabe health care conglomerates like CVS (NYSE: CVS)?
Ha. I knew CVS was distracting us with those long receipts for a reason…
Keep your theories to yourself, but one thing’s for sure: Amazon, CVS, UnitedHealth Group (NYSE: UNH) and Option Care Health (Nasdaq: OPCH) are all in the bidding for Signify Health (NYSE: SGFY).
As a provider for health information services, Signify’s significance is, well, data. Lots and lots of personal data. And thus began the bidding war.
When you have that many potential bidders fighting over one company, it’s no wonder Signify stock shot up 33% today. The bids are due around Labor Day — and no, I don’t think the auction is gonna be held on eBay.
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Gone: Tesla’s Gonna Tesla
In a move that surprised absolutely no one, Tesla (Nasdaq: TSLA) announced it’s raising the price on its Full Self Driving (FSD) service — from $12,000 to $15,000 come September.
You know … the FSD service that’s “full self driving” in name only? The one we continuously poke fun at for being almost kinda not really autonomous driving while still calling itself “full self driving?” Yeah, that one.
Prices are going up 25% for what’s basically a hyped-up driver assistance program with Tesla’s logo (and pricing power). For a price increase like that, you’d almost think Tesla was upgrading to better tech, like lidar, but nope.
Something … something … inflation or whatever.
That’s not all Tesla announced however: The company will also start rolling out its FSD beta software update, letting Tesla drivers test new driver assistance features out on regular ol’ public roads.
Now what could go wrong with that?
What do you think, Great Ones? Have you tried Tesla’s FSD features? Are they worth the cost? Do you want to rant for or against Tesla? Tired of hearing about everything Tesla? (Don’t worry, we are too.)
Oh, yeah … and do we have any APEs in our midst? Where are all y’all AMC hodlers at?
Whatever you want to rant, rave, vent or ramble about, send it to our inbox: GreatStuffToday@BanyanHill.com. Write to us!
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