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- EgohEgoh
  ·2021-07-07
  More trading ideas
  Has Xpeng's dual primary listing set the stage for homecoming by more US-listed Chinese tech firms?
  The trading debut of Xpeng's US$1.8 billion initial public offering (IPO) in Hong Kong kicked off a
  Has Xpeng's dual primary listing set the stage for homecoming by more US-listed Chinese tech firms?
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- EgohEgoh
  ·2021-07-07
  Wow
  AMC Entertainment Shareholders Are Making a Huge Mistake
  The company shelved a proposal to sell an additional 25 million shares.
  AMC Entertainment Shareholders Are Making a Huge Mistake
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Xpeng has, however, become the first company with a weighted voting rights (WVRs) structure to choose Hong Kong as its second home jurisdiction in a dual primary listing, setting an example for other similarly structured US-listed Chinese technology companies despite a sell-off in Chinese technology stocks in the city in the aftermath of Beijing's latest crackdown.</p>\n<p>\"A dual listing in Hong Kong provides US-listed Chinese issuers with an option to mitigate geopolitical tensions between the US and China,\" said Brian Gu, Xpeng's vice-chairman and president.</p>\n<p>Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.</p>\n<p>The Xpeng IPO will boost the Hong Kong bourse's ongoing drive to attract mainland China's technology innovators through dual primary listings. Reinforcing its role as the fundraising hub helping such mainland companies achieve Chinese President Xi Jinping's \"Made in China 2025\" industrial master plan means lucrative business for the Hong Kong stock exchange.</p>\n<p>Moreover, Beijing wants home-grown carmakers to command 80 per cent of China's electric vehicle (EV) market by 2025. And by carrying out its dual primary listing, Guangzhou-based Xpeng has shown other US-listed Chinese EV makers, NIO and Li Auto, how to navigate the new set of listing rules - introduced in April 2018 as part of a sweeping reform by the Hong Kong exchange - to list closer to home and hedge against the risks posed by a worsening US-China technology rivalry.</p>\n<p>Xpeng's Gu, who was the chairman of JPMorgan's Asia-Pacific Investment Banking business before joining the start-up in March 2018, is no stranger to Nicolas Aguzin, the new CEO of bourse operator Hong Kong Exchanges and Clearing (HKEX), himself a veteran JPMorgan banker. A successful dual primary listing by a Chinese company with WVRs could open the floodgates for the exchange, a win-win outcome for both former bankers.</p>\n<p>The local exchange will also benefit from Beijing's latest crackdown. The shares of Hong Kong Exchanges and Clearing rose 5.3 per cent to HK$$491 on Wednesday, as investors bet on the city Hong Kong benefiting from China's new listing rules.</p>\n<p>Xpeng's dual primary listing will not only allow it to expand its investor base to mainland China through Hong Kong, it will also subject it to a level of regulatory scrutiny on a par with the US, its first listing location.</p>\n<p>To be sure, the EV maker is not the first issuer to conduct a dual primary listing in the city. That honour goes to Nasdaq-listed pharmaceutical company BeiGene, which raised US$903 million in August 2018 in Hong Kong. But Xpeng made use of a new listing chapter introduced in April 2018 specifically designed for WVR companies to complete its dual primary listing.</p>\n<p>A WVRs structure confers founders and management of a company with more voting power than general investors. While Alibaba Group Holding, which owns this newspaper, and Baidu also have such structures, both chose a secondary listing in Hong Kong, which exempts issuers from full compliance with the city's listing rules and but offer a faster route to an IPO and a listing. It would take just three months for a secondary listing issuer from filing an application to listing, compared to an average of 180 to 200 days for a primary listing.</p>\n<p>To qualify for a secondary listing, a Chinese issuer needs to have a track record of at least two full financial years of good compliance with a US exchange. Xpeng, which listed on the New York Stock Exchange last August, falls short of that and so a secondary listing was not an option.</p>\n<p>And while there is more paperwork involved, the biggest reward for a dual primary listing lies in a potential inclusion into the stock connects, mutual market access mechanisms that allow mainland Chinese investors in Shanghai and Shenzhen to trade Hong Kong stocks, and vice versa.</p>\n<p>\"If we had qualified for a secondary listing and chosen to list via that avenue, we wouldn't have been able to capture investors from China,\" said Gu, adding that he remained confident that Xpeng's market capitalisation - HK$280 billion (US$36 billion) at the time of listing based on its IPO offer price of HK$165 - will eventually qualify it for an inclusion.</p>\n<p>In September last year, BeiGene was also included in the stock connect, less than a year after its Hong Kong listing. Such inclusion is off-limits to companies listed through a secondary flotation.</p>\n<p>Inclusion in the stock connects is significant because, for instance, the average daily trading value of the Shanghai southbound stock connect, which represents flows from mainland investors trading Hong Kong via the Shanghai bourse, totalled HK$13.1 billion last year, rising to HK$16.7 billion in June.</p>\n<p>On the downside to a dual primary listing, applicants cannot enjoy a range of automatic waivers available to secondary listing companies. These waivers include, for example, exemption from the need for issuers to establish audit and pay committees, or the need to submit a profit forecast to the exchange during the vetting process.</p>\n<p>\"The Hong Kong bourse is proven to be the natural choice for homecoming listings. It is expected that more US-listed Chinese companies will follow suit,\" Irene Chu, a partner at KPMG, said in a recent report on the global IPO market.</p>\n<p>Moreover, all shares listed in Hong Kong are fungible, or interchangeable, with American depositary shares. Such fungibility is off-limits to Chinese exchanges because of China's capital controls.</p>\n<p>For the more than 200 Chinese companies listed in the US, the signing of the Holding Foreign Companies Accountable Act into law has heightened the risk of delisting if they fail to comply with US auditing rules.</p>\n<p>\"There are still many US-listed Chinese companies that are weighing a plan B to hedge against the risk of delisting,\" said Bruce Pang, head of macro, strategy research at China Renaissance. \"A dual primary listing represents HKEX's move to give more options to these companies, to provide a backstop to their existing US investors.\"</p>","source":"yahoofinance","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Has Xpeng's dual primary listing set the stage for homecoming by more US-listed Chinese tech firms?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nHas Xpeng's dual primary listing set the stage for homecoming by more US-listed Chinese tech firms?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-07 20:57 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/xpengs-dual-primary-listing-set-093000270.html><strong>South China Morning Post</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The trading debut of Xpeng's US$1.8 billion initial public offering (IPO) in Hong Kong kicked off a day after Beijing announced a new set of rules for companies looking to raise capital on overseas ...</p>\n\n<a href=\"https://finance.yahoo.com/news/xpengs-dual-primary-listing-set-093000270.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"XPEV":"小鹏汽车","06160":"百济神州"},"source_url":"https://finance.yahoo.com/news/xpengs-dual-primary-listing-set-093000270.html","is_english":true,"share_image_url":"https://static.laohu8.com/5f26f4a48f9cb3e29be4d71d3ba8c038","article_id":"2149397835","content_text":"The trading debut of Xpeng's US$1.8 billion initial public offering (IPO) in Hong Kong kicked off a day after Beijing announced a new set of rules for companies looking to raise capital on overseas exchanges.\nThe stock opened on Wednesday 1.8 per cent higher at HK$168 before ending the day flat at its IPO price of HK$165. Xpeng has, however, become the first company with a weighted voting rights (WVRs) structure to choose Hong Kong as its second home jurisdiction in a dual primary listing, setting an example for other similarly structured US-listed Chinese technology companies despite a sell-off in Chinese technology stocks in the city in the aftermath of Beijing's latest crackdown.\n\"A dual listing in Hong Kong provides US-listed Chinese issuers with an option to mitigate geopolitical tensions between the US and China,\" said Brian Gu, Xpeng's vice-chairman and president.\nDo you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.\nThe Xpeng IPO will boost the Hong Kong bourse's ongoing drive to attract mainland China's technology innovators through dual primary listings. Reinforcing its role as the fundraising hub helping such mainland companies achieve Chinese President Xi Jinping's \"Made in China 2025\" industrial master plan means lucrative business for the Hong Kong stock exchange.\nMoreover, Beijing wants home-grown carmakers to command 80 per cent of China's electric vehicle (EV) market by 2025. And by carrying out its dual primary listing, Guangzhou-based Xpeng has shown other US-listed Chinese EV makers, NIO and Li Auto, how to navigate the new set of listing rules - introduced in April 2018 as part of a sweeping reform by the Hong Kong exchange - to list closer to home and hedge against the risks posed by a worsening US-China technology rivalry.\nXpeng's Gu, who was the chairman of JPMorgan's Asia-Pacific Investment Banking business before joining the start-up in March 2018, is no stranger to Nicolas Aguzin, the new CEO of bourse operator Hong Kong Exchanges and Clearing (HKEX), himself a veteran JPMorgan banker. A successful dual primary listing by a Chinese company with WVRs could open the floodgates for the exchange, a win-win outcome for both former bankers.\nThe local exchange will also benefit from Beijing's latest crackdown. The shares of Hong Kong Exchanges and Clearing rose 5.3 per cent to HK$$491 on Wednesday, as investors bet on the city Hong Kong benefiting from China's new listing rules.\nXpeng's dual primary listing will not only allow it to expand its investor base to mainland China through Hong Kong, it will also subject it to a level of regulatory scrutiny on a par with the US, its first listing location.\nTo be sure, the EV maker is not the first issuer to conduct a dual primary listing in the city. That honour goes to Nasdaq-listed pharmaceutical company BeiGene, which raised US$903 million in August 2018 in Hong Kong. But Xpeng made use of a new listing chapter introduced in April 2018 specifically designed for WVR companies to complete its dual primary listing.\nA WVRs structure confers founders and management of a company with more voting power than general investors. While Alibaba Group Holding, which owns this newspaper, and Baidu also have such structures, both chose a secondary listing in Hong Kong, which exempts issuers from full compliance with the city's listing rules and but offer a faster route to an IPO and a listing. It would take just three months for a secondary listing issuer from filing an application to listing, compared to an average of 180 to 200 days for a primary listing.\nTo qualify for a secondary listing, a Chinese issuer needs to have a track record of at least two full financial years of good compliance with a US exchange. Xpeng, which listed on the New York Stock Exchange last August, falls short of that and so a secondary listing was not an option.\nAnd while there is more paperwork involved, the biggest reward for a dual primary listing lies in a potential inclusion into the stock connects, mutual market access mechanisms that allow mainland Chinese investors in Shanghai and Shenzhen to trade Hong Kong stocks, and vice versa.\n\"If we had qualified for a secondary listing and chosen to list via that avenue, we wouldn't have been able to capture investors from China,\" said Gu, adding that he remained confident that Xpeng's market capitalisation - HK$280 billion (US$36 billion) at the time of listing based on its IPO offer price of HK$165 - will eventually qualify it for an inclusion.\nIn September last year, BeiGene was also included in the stock connect, less than a year after its Hong Kong listing. Such inclusion is off-limits to companies listed through a secondary flotation.\nInclusion in the stock connects is significant because, for instance, the average daily trading value of the Shanghai southbound stock connect, which represents flows from mainland investors trading Hong Kong via the Shanghai bourse, totalled HK$13.1 billion last year, rising to HK$16.7 billion in June.\nOn the downside to a dual primary listing, applicants cannot enjoy a range of automatic waivers available to secondary listing companies. These waivers include, for example, exemption from the need for issuers to establish audit and pay committees, or the need to submit a profit forecast to the exchange during the vetting process.\n\"The Hong Kong bourse is proven to be the natural choice for homecoming listings. It is expected that more US-listed Chinese companies will follow suit,\" Irene Chu, a partner at KPMG, said in a recent report on the global IPO market.\nMoreover, all shares listed in Hong Kong are fungible, or interchangeable, with American depositary shares. Such fungibility is off-limits to Chinese exchanges because of China's capital controls.\nFor the more than 200 Chinese companies listed in the US, the signing of the Holding Foreign Companies Accountable Act into law has heightened the risk of delisting if they fail to comply with US auditing rules.\n\"There are still many US-listed Chinese companies that are weighing a plan B to hedge against the risk of delisting,\" said Bruce Pang, head of macro, strategy research at China Renaissance. \"A dual primary listing represents HKEX's move to give more options to these companies, to provide a backstop to their existing US investors.\"","news_type":1},"isVote":1,"tweetType":1,"viewCount":66,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":140242002,"gmtCreate":1625664245806,"gmtModify":1703745900345,"author":{"id":"3561498903832131","authorId":"3561498903832131","name":"Egoh","avatar":"https://static.tigerbbs.com/8069ade69a847fac3c022d5c5f031f70","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3561498903832131","authorIdStr":"3561498903832131"},"themes":[],"htmlText":"Wow","listText":"Wow","text":"Wow","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/140242002","repostId":"2149160390","repostType":4,"repost":{"id":"2149160390","pubTimestamp":1625664000,"share":"https://ttm.financial/m/news/2149160390?lang=&edition=fundamental","pubTime":"2021-07-07 21:20","market":"us","language":"en","title":"AMC Entertainment Shareholders Are Making a Huge Mistake","url":"https://stock-news.laohu8.com/highlight/detail?id=2149160390","media":"Motley Fool","summary":"The company shelved a proposal to sell an additional 25 million shares.","content":"<p>The most surprising stock of 2021 is probably <b>AMC Entertainment Holdings</b> (NYSE:AMC), the world's largest movie theater chain. Any objective observer would view the company as being in very dire straits; after all, AMC is saddled with billions in debt, reeling from the global pandemic, and facing a highly uncertain recovery amid the streaming revolution and compressed theatrical windows. Of course, this being the year of the meme stock and Reddit-fueled speculation, the stock is up a massive 2,350% this year.</p>\n<p>Retail investors apparently see the stock as a reopening play and a short squeeze candidate, while also also betting their online community will keep buying and holding the stock.</p>\n<p>That's a dubious proposition, however, as it's really, really difficult to see how AMC's intrinsic value is now worth anything close to its current share price.</p>\n<p>Of course, given its inflated share price, AMC does have a chance to raise money to help it through this transition period and potentially transform the company. But its shareholders are preventing management from doing what it needs to do, hurting their own cause in the process.</p>\n<h2>AMC pulls the plug on more share sales</h2>\n<p>On July 6, AMC filed a document with the SEC saying it would not seek shareholder approval to sell another 25 million shares at the upcoming July 29 annual shareholder meeting. CEO Adam Aron, who has taken great pains to cultivate an online relationship with his retail shareholder base, took to <a href=\"https://laohu8.com/S/TWTR\">Twitter</a> to say that due to the significant opposition from many shareholders to further dilution, the company would be scrapping that proposal:</p>\n<blockquote>\n 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. So, we're cancelling the July vote on more shares. And no more such requests in 2021. 1 of 2 pic.twitter.com/yNLhBAU5y1— Adam Aron (@CEOAdam) July 6, 2021\n</blockquote>\n<p>Kudos to Aron for being responsive to his retail shareholders, who have already helped out the company tremendously by bidding up the stock and allowing the company to raise about $1.25 billion last quarter. Obviously, he needs to keep the retail message boards happy and AMC's stock high for as long as possible.</p>\n<p>However, shareholders really should have approved another 25 million shares, which would have raised a significant amount -- basically another $1.25 billion at these prices, with minimal further dilution. It's a massive unforced error.</p>\n<h2>Despite massive dilution already, AMC still could use more cash</h2>\n<p>I don't think retail investors quite understand the predicament in which AMC still finds itself -- even after all the money it's raised. Although the domestic June box office has bounced back to top $1 billion for the first time since February 2020, it's still well short of pre-pandemic levels. Only around 80% of theaters are open, and the delta variant is still wreaking havoc in Europe, where AMC also owns a significant amount of theaters.</p>\n<p>Movie theaters are a high fixed-cost business, so unless theaters are open and close to full capacity, the company will still likely be burning cash in the second quarter. Given how much it's raised and how much the company had at the end of the first quarter, AMC's cash levels are likely a little under $2 billion.</p>\n<p>You might think that's a lot, but a look further down the balance sheet shows other hazards lurking. AMC still has over $5.4 billion in debt and another $4.9 billion in lease liabilities. Furthermore, at the end of the first quarter, its current liabilities outstripped its current assets by another $500 million, likely due to some deferred rent it will now have to pay. Those current assets have since been boosted by the equity sales, but that's a lot of liabilities on the balance sheet for a company that is still likely unprofitable.</p>\n<p>Furthermore, <a href=\"https://laohu8.com/S/AONE\">one</a> of the only ways today's stock price has a chance of making sense is if AMC can purchase other bankrupt theater chains on the cheap. But that will take a lot of capital, too. According to <i>Deadline</i>, AMC may be absorbing the leases of two high-traffic California cinemas, The Grove in Los Angeles and the Americana mall in Glendale, from the previous owner.</p>\n<p>Having been to The Grove shopping center, I can attest this is a very high-traffic theater. It would be great if AMC could scoop up more leases of well-placed theaters whose owners are now bankrupt without stretching its balance sheet any further. But since shareholders have blocked more equity sales, AMC may have to leave other similar opportunities on the table.</p>\n<h2>Shareholders aren't seeing the big picture</h2>\n<p>While AMC's share count has roughly quintupled since before the pandemic, remarkably, shares are trading close to all-time highs -- in fact, much higher than before the pandemic, when the company was operating at full strength. So at roughly $50 per share and more than a $25 billion market cap, AMC should be raising all the money it can at these prices to make sure it can get through the pandemic and take advantage of any opportunities that may come up. After all, the company was only asking for another 25 million shares, which would amount to just under 5% dilution at today's share count. That's really peanuts relative to the dilution that's already occurred.</p>\n<p>But of course, some meme-stock holders may not be doing any math, or thinking about intrinsic value. Most of the commentary you read on Reddit is about solidarity in \"holding the line\" and \"sticking it to the shorts.\" That kind of coordinated buying can work for a while, but as Warren Buffett's teacher Benjamin Graham once said, \"in the short run, the stock market is a voting machine, in the long run, it's a weighing machine.\"</p>\n<p>We don't know how long this coordinated \"voting\" will go on, but it won't be forever. When the bubble bursts, I think shareholders will wish AMC had another $1.25 billion in cash on hand. It's a big unforced error on shareholders' part.</p>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>AMC Entertainment Shareholders Are Making a Huge Mistake</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAMC Entertainment Shareholders Are Making a Huge Mistake\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-07 21:20 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2021/07/07/amc-entertainment-shareholders-are-making-a-huge-m/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The most surprising stock of 2021 is probably AMC Entertainment Holdings (NYSE:AMC), the world's largest movie theater chain. Any objective observer would view the company as being in very dire ...</p>\n\n<a href=\"https://www.fool.com/investing/2021/07/07/amc-entertainment-shareholders-are-making-a-huge-m/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AMC":"AMC院线"},"source_url":"https://www.fool.com/investing/2021/07/07/amc-entertainment-shareholders-are-making-a-huge-m/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2149160390","content_text":"The most surprising stock of 2021 is probably AMC Entertainment Holdings (NYSE:AMC), the world's largest movie theater chain. Any objective observer would view the company as being in very dire straits; after all, AMC is saddled with billions in debt, reeling from the global pandemic, and facing a highly uncertain recovery amid the streaming revolution and compressed theatrical windows. Of course, this being the year of the meme stock and Reddit-fueled speculation, the stock is up a massive 2,350% this year.\nRetail investors apparently see the stock as a reopening play and a short squeeze candidate, while also also betting their online community will keep buying and holding the stock.\nThat's a dubious proposition, however, as it's really, really difficult to see how AMC's intrinsic value is now worth anything close to its current share price.\nOf course, given its inflated share price, AMC does have a chance to raise money to help it through this transition period and potentially transform the company. But its shareholders are preventing management from doing what it needs to do, hurting their own cause in the process.\nAMC pulls the plug on more share sales\nOn July 6, AMC filed a document with the SEC saying it would not seek shareholder approval to sell another 25 million shares at the upcoming July 29 annual shareholder meeting. CEO Adam Aron, who has taken great pains to cultivate an online relationship with his retail shareholder base, took to Twitter to say that due to the significant opposition from many shareholders to further dilution, the company would be scrapping that proposal:\n\n 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. So, we're cancelling the July vote on more shares. And no more such requests in 2021. 1 of 2 pic.twitter.com/yNLhBAU5y1— Adam Aron (@CEOAdam) July 6, 2021\n\nKudos to Aron for being responsive to his retail shareholders, who have already helped out the company tremendously by bidding up the stock and allowing the company to raise about $1.25 billion last quarter. Obviously, he needs to keep the retail message boards happy and AMC's stock high for as long as possible.\nHowever, shareholders really should have approved another 25 million shares, which would have raised a significant amount -- basically another $1.25 billion at these prices, with minimal further dilution. It's a massive unforced error.\nDespite massive dilution already, AMC still could use more cash\nI don't think retail investors quite understand the predicament in which AMC still finds itself -- even after all the money it's raised. Although the domestic June box office has bounced back to top $1 billion for the first time since February 2020, it's still well short of pre-pandemic levels. Only around 80% of theaters are open, and the delta variant is still wreaking havoc in Europe, where AMC also owns a significant amount of theaters.\nMovie theaters are a high fixed-cost business, so unless theaters are open and close to full capacity, the company will still likely be burning cash in the second quarter. Given how much it's raised and how much the company had at the end of the first quarter, AMC's cash levels are likely a little under $2 billion.\nYou might think that's a lot, but a look further down the balance sheet shows other hazards lurking. AMC still has over $5.4 billion in debt and another $4.9 billion in lease liabilities. Furthermore, at the end of the first quarter, its current liabilities outstripped its current assets by another $500 million, likely due to some deferred rent it will now have to pay. Those current assets have since been boosted by the equity sales, but that's a lot of liabilities on the balance sheet for a company that is still likely unprofitable.\nFurthermore, one of the only ways today's stock price has a chance of making sense is if AMC can purchase other bankrupt theater chains on the cheap. But that will take a lot of capital, too. According to Deadline, AMC may be absorbing the leases of two high-traffic California cinemas, The Grove in Los Angeles and the Americana mall in Glendale, from the previous owner.\nHaving been to The Grove shopping center, I can attest this is a very high-traffic theater. It would be great if AMC could scoop up more leases of well-placed theaters whose owners are now bankrupt without stretching its balance sheet any further. But since shareholders have blocked more equity sales, AMC may have to leave other similar opportunities on the table.\nShareholders aren't seeing the big picture\nWhile AMC's share count has roughly quintupled since before the pandemic, remarkably, shares are trading close to all-time highs -- in fact, much higher than before the pandemic, when the company was operating at full strength. So at roughly $50 per share and more than a $25 billion market cap, AMC should be raising all the money it can at these prices to make sure it can get through the pandemic and take advantage of any opportunities that may come up. After all, the company was only asking for another 25 million shares, which would amount to just under 5% dilution at today's share count. That's really peanuts relative to the dilution that's already occurred.\nBut of course, some meme-stock holders may not be doing any math, or thinking about intrinsic value. Most of the commentary you read on Reddit is about solidarity in \"holding the line\" and \"sticking it to the shorts.\" That kind of coordinated buying can work for a while, but as Warren Buffett's teacher Benjamin Graham once said, \"in the short run, the stock market is a voting machine, in the long run, it's a weighing machine.\"\nWe don't know how long this coordinated \"voting\" will go on, but it won't be forever. When the bubble bursts, I think shareholders will wish AMC had another $1.25 billion in cash on hand. It's a big unforced error on shareholders' part.","news_type":1},"isVote":1,"tweetType":1,"viewCount":52,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"defaultTab":"posts","isTTM":true}