Shares of meme traders’ stock favorites, including AMC Entertainment Holdings and Bed Bath & Beyond had enjoyed significant gains until last week. Bed Bath & Beyond had soared by more than 280 percent since July before the intense selloff of nearly 50 percent. AMC shares had climbed by about 78 percent since the end of July before cratering by more than 56 percent.
Cineworld Rival Tanks AMC?
AMC rival Cineworld Group PLC confirmed that it’s considering filing for Chapter 11 bankruptcy protection in the United States.One of the world’s largest movie theater chains noted that bankruptcy is one option to ensure that the company survives and successfully rebounds from the negative effects that COVID-19 public health restrictions had on its business model. A Chapter 11 submission would give the company some time to restructure its debt and file a proposal to the bankruptcy court.
Cineworld, which owns Regal Cinemas in the United States, confirmed that it’s in discussions with major stakeholders and lenders.
The theater giant noted that operations would remain open for business as it assesses its financial situation.
“Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees,” the statement reads.
The pent-up demand to watch films on the big screen and blockbuster successes, such as “Top Gun: Maverick” and “Jurassic World: Dominion,” has helped its finances, the company stated. However, in March, Cineworld reported a $565.8 million loss after taxes and a debt of $4.8 billion. It also took a financial hit when it canceled its 2020 takeover of Cineplex, the Canadian movie theater titan.
Cineworld shares tumbled by 6.67 percent on the LSE on Aug. 22.
Investors Go APE
AMC’s APEs (AMC preferred equity units) began trading on the New York Stock Exchange (NYSE), opening at $6.95. It rose by 1.57 percent on Aug. 24 to $7.13. One APE unit will be given for each common share, so approximately 517 million shares of the new stock will be formed.APE is a reference to the social media investors who commonly referred to themselves as “apes” or “ape nation” during last year’s rally.
The investment will also target its massive debt burden. It presently possesses roughly $5.5 billion in outstanding debt and a net operating cash flow of negative $615 million at the end of 2021. However, AMC hopes that it will raise enough cash to reduce its debt holdings and potentially allow the company to purchase other movie theater chains and companies.
The company also stated that these new shares should eliminate concerns that the movie theater chain could collapse because of the weight of debt accumulated during the COVID-19 pandemic.
Blood Bath & Beyond?
Last week, billionaire investor Ryan Cohen confirmed that he sold his entire stake in the beleaguered retailer, which gave him a $68.1 million profit. Many meme traders who bought into the company because of him also bailed out upon news of his sale.This triggered a significant 40 percent decline in the stock price over the past week.
Bed Bath & Beyond will now need to raise enough capital to sustain operations. Some suppliers have chosen to stop or restrict shipments over missed payments.
But any sale would only serve as a lifeline in the short term, market experts say. Supply chain disruptions and bloated inventory levels are some of the near-term problems gripping the retailer.