Will AMC Entertainment Regret Nixing a Stock Sale?
Sometimes a company goes too far to achieve near-term popularity at the expense of long-term sustainability, and that could be AMC Entertainment Holdings (NYSE: AMC) right now. CEO Adam Aron is tabling a proposal that was supposed to be voted on at this month's annual shareholder meeting that would have authorized the selling of 25 million more shares of AMC stock.
Aron is framing the decision to nix the stock sale as a victory for retail investors, but it's an odd flex. AMC has more than quadrupled its share count over the past year. There are now more than 500 million shares outstanding. Would adding another 5% to its share count really rock the boat? Aron is also promising that there won't be any new votes authorizing stock sales until at least next year.
If AMC stock is trading this high or higher come 2022 it will be easy to applaud Aron's decision as a way to lift the ceiling. The narrative changes if the stock is lower, of course. In that scenario AMC could've helped raise its floor by selling freshly minted stock at an elevated price point. You can't pander to the floor and the ceiling at the same time, so maybe it's fitting the multiplex itself has a slanted floor and a high ceiling.
Source Fool.com
