AMC Entertainment (NYSE:AMC)fell as much as 11.6%as the stock opened Friday following its second-quarter earnings report, with investor attention placed not so much on the in-line financial results as news about a potentially changing capital structure.
By the end of the day, AMC stock closed up 18.9%, its best gain since March.
AMC established a preferred-equity issue it's distributing to its "Ape Army" of common shareholders, tickered "APE." The preferred stock has a par value of $0.01, but it could be convertible to common shares in the future.
That put another capital-raising arrow in CEO Adam Aron's quiver, but also raised the prospect of significant dilution of common shareholders, leading the stock to fall postmarket Thursday, in the premarket Friday, and at Friday's open.
But Aron's rallying of the troops had an effect, as a flood of buying volume drove Friday's19% gain. The stock now has its best close since April 4, and volume Friday was just short of triple daily average.
The meme-friendly shareholders had been asking Aron "Wen pounce?"in search of when the company would make a move to punish what it sees as an enemy assemblage of short sellers keeping the stock down.
"Today we pounce" was the rallying cry that Aron used in a series of tweets explaining the new preferred equity, saying the company "broke out the 3-D chess board and got creative."
Analysts saw the new issue as a "security blanket" and "dry powder" for more flexibility, but it seemed an open question of whether future conversions might make the move accretive or dilutive.