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Here's AMC's blunt new warning to prospective buyers of its new stock offering

Dow Jones2021-06-04

AMC Entertainment Holdings on Thursday announced a new stock sale to take advantage of the extraordinary retail interest that has driven the movie-theater chain's equity up by 2,850% this year.

AMC's $(AMC)$ lawyers are apparently as surprised as anyone -- so much so that the company added a fresh risk factor to its 11 million--share sale, which basically boils down to this warning: Prepare to lose everything if you buy the stock.

The following is the full, extraordinary warning (bolded and italicized text reproduced as in AMC prospectus):

The market prices and trading volume of our shares of Class A common stock have recently experienced, and may continue to experience, extreme volatility, which could cause purchasers of our Class A common stock to incur substantial losses.

The market prices and trading volume of our shares of Class A common stock have recently experienced, and may continue to experience, extreme volatility, which could cause purchasers of our Class A common stock to incur substantial losses. For example, during 2021 to date, the market price of our Class A common stock has fluctuated from an intra-day low of $1.91 per share on January 5, 2021 to an intra-day high on the NYSE of $72.62 on June 2, 2021 and the last reported sale price of our Class A common stock on the NYSE on June 2, 2021, was $62.55 per share. During 2021 to date, daily trading volume ranged from approximately 23,598,228 to 1,253,253,550 shares. Within the last seven business days, the market price of our Class A common stock has fluctuated from an intra-day low of $12.18 on May 24, 2021 to an intra-day high of $72.62 on June 2, 2021, and we have made no disclosure regarding a change to our underlying business during that period, other than with respect to an additional financing.

We believe that the recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last. Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.

Extreme fluctuations in the market price of our Class A common stock have been accompanied by reports of strong and atypical retail investor interest, including on social media and online forums. The market volatility and trading patterns we have experienced create several risks for investors, including the following:

  • the market price of our Class A common stock has experienced and may continue to experience rapid and substantial increases or decreases unrelated to our operating performance or prospects, or macro or industry fundamentals, and substantial increases may be significantly inconsistent with the risks and uncertainties that we continue to face;
  • factors in the public trading market for our Class A common stock include the sentiment of retail investors (including as may be expressed on financial trading and other social media sites and online forums), the direct access by retail investors to broadly available trading platforms, the amount and status of short interest in our securities, access to margin debt, trading in options and other derivatives on our Class A common stock and any related hedging and other trading factors;
  • our market capitalization, as implied by various trading prices, currently reflects valuations that diverge significantly from those seen prior to recent volatility and that are significantly higher than our market capitalization immediately prior to the COVID-19 pandemic, and to the extent these valuations reflect trading dynamics unrelated to our financial performance or prospects, purchasers of our Class A common stock could incur substantial losses if there are declines in market prices driven by a return to earlier valuations;
  • to the extent volatility in our Class A common stock is caused, as has widely been reported, by a “short squeeze” in which coordinated trading activity causes a spike in the market price of our Class A common stock as traders with a short position make market purchases to avoid or to mitigate potential losses, investors purchase at inflated prices unrelated to our financial performance or prospects, and may thereafter suffer substantial losses as prices decline once the level of short-covering purchases has abated; and
  • if the market price of our Class A common stock declines, you may be unable to resell your shares at or above the price at which you acquired them. We cannot assure you that the equity issuance of our Class A common stock will not fluctuate or decline significantly in the future, in which case you could incur substantial losses.

We may continue to incur rapid and substantial increases or decreases in our stock price in the foreseeable future that may not coincide in timing with the disclosure of news or developments by or affecting us. Accordingly, the market price of our shares of Class A common stock may fluctuate dramatically, and may decline rapidly, regardless of any developments in our business.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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Comment463

  • NewbieLeo
    ·2021-06-04
    Feeling adventurous and have a risk appetite? There may still be upside.
    Reply
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  • RichTea
    ·2021-06-04
    FUD. Squeeze still gonna happen. We are up 95% on one day, correction of 20% is nothing. Relax
    Reply
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  • DandanC
    ·2021-06-04
    Legally it is a must to write the document like that to prevent any future lawsuits..please watch his interview with Trey’s trade. It’s all about making AMC healthy on the balance sheets while we now can fully focus on the short squeeze that the hedge funds are just trying to cover up! HODL
    Reply
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  • Nibatry
    ·2021-06-04
    Oh no [驚訝] 
    Reply
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  • Junias
    ·2021-06-04
    Feels lucky that i had sold mine again. 
    Reply
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  • sk27
    ·2021-06-04
    Be careful
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  • yct
    ·2021-06-04
    HODL
    Reply
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  • Jer_Soul
    ·2021-06-04
    Amc
    Reply
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  • Jx24
    ·2021-06-04
    Oh my god
    Reply
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  • Pigmonkey
    ·2021-06-04
    Comment pls
    Reply
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    • yct
      No
      2021-06-04
      Reply
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  • TimTamPrata
    ·2021-06-04
    Comment please
    Reply
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  • DarrylAng
    ·2021-06-04
    Like and comment please 
    Reply
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    • yct
      No
      2021-06-04
      Reply
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  • Backglider
    ·2021-06-04
    Please like and comment. Thank you
    Reply
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    • Gigachad
      Comment
      2021-06-04
      Reply
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    • DarrylAng
      like and comment please
      2021-06-04
      Reply
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    • GigachadReplying toDarrylAng
      Thank you
      2021-06-04
      Reply
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  • DandanC
    ·2021-06-04
    Legally they have to do this to prevent any future legal lawsuit against them..such a low move by the hedge funds...
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    • NewbieLeo
      its pretty obvious it's a regulated move.
      2021-06-04
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  • Henryee18
    ·2021-06-04
    This is not a matter
    Reply
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    • DandanC
      Hodl???
      2021-06-04
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  • Dem0171c
    ·2021-06-04
    Latest
    Reply
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    • Gigachad
      Hi ?
      2021-06-04
      Reply
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  • FrankPang
    ·2021-06-04
    Like n comment
    Reply
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    • yuannn
      Comment back
      2021-06-04
      Reply
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    • FrankPang
      Comment
      2021-06-04
      Reply
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  • Vivavia
    ·2021-06-04
    Comment pls
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    • FunnyFun
      Reply back
      2021-06-04
      Reply
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  • phtan68
    ·2021-06-04
    加油,努力
    Reply
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    • Vivavia
      Reply comment pls
      2021-06-04
      Reply
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  • JAMKKT
    ·2021-06-04
    Ok
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    • Vivavia
      Reply this commwnt pls
      2021-06-04
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