AMC's Reverse Stock Split Takes Effect; Shares Tumbled 20%

AMC completed a reverse stock split Thursday, ahead of a planned conversion of preferred equity units into common shares.

The reverse split gave shareholders in the movie-theater chain one share for every 10 they previously held, and has the effect of increasing AMC's share price.

The conversion of AMC's preferred "Ape" units and reduction of shares outstanding will allow AMC to sell a substantial amount of new shares as it attempts to shore up its balance sheet. Chief Executive Adam Aron said last month that giving AMC the ability to sell stock when needed would "take bankruptcy risk off the table."

AMC shares traded down around 20% in moring trading after adjusting for the reverse split.