According to Public.com, “All [AMC] positions purchased before market close on Aug. 19 will be eligible to receive the [APE] dividend. [APE] dividends will be issued at close of trading on Friday, Aug. 19.” Aron and the board have a small window to truly capitalize on AMC’s artificial price gains, and it’s quickly closing. Unless apes suddenly come to their senses, AMC could be back on bankruptcy watch within a few years. By pushing back against the 500-million-share proposal — AMC eventually pulled this proxy vote — apes denied the company the opportunity raise capital to put itself on better financial footing.

When someone shorts a stock, they borrow shares of it, sell those shares, and then — if all goes according to plan — buy the shares back at a lower price, pocketing the difference. But that buying activity is itself a factor that pushes up the stock price, which is where the squeeze comes in. There have been other bubbles in the past, from tulip mania in the 1600s, Britain’s South Sea bubble in the 1700s on through the dot.com and real estate housing bubbles of this century. Right now, we have a continuing bubble in fixed income securities, with $14 trillion of negative yielding government debt, as well as this meme stock bubble.

Before GameStop became a meme stock in 2021, there had already been plenty of rumblings about it. Michael Burry, a name you might recognize from The Big Short, revealed a position in the company in 2018. Among retail traders, interest in the company began to grow, with some noting the high level of short interest in the company and others simply believing it was a good investment. For years, a Massachusetts-based man named Keith Gill who went by Roaring Kitty on YouTube and DeepFuckingValue on Reddit beat the drum of a comedy-laced case for the stock.

Aron has raised eyebrows with his sales of AMC shares, on which he’s made tens of millions of dollars between November 2021 and early 2022. In January, he said that was the end of the selling, on Twitter declaring, “I am in! ” The sales took place at a price well above where AMC is currently trading. In time, as the gimmicks fail to deliver, all while top execs unload shares, something has to give. Perhaps you’ve heard the latest chatter on Reddit or elsewhere about the company’s plans to accept cryptocurrency as payment for gift cards and movie tickets.

Choose a Reddit account to continue

Ryan Cohen, co-founder of the pet avatrade review e-commerce company Chewy, revealed a major stake in GameStop in August 2020, igniting further excitement about GameStop’s future. By January 2021, the stock really took off as a short squeeze sent GameStop prices soaring. It will soon mark two years since the meme stock — so called for their joke-laden, internet-specific virality — craze swept the markets and the media. The episode was characterized by the typical rash of stories of triumph on the way up, with tales of retail investors making life-changing money on stocks that shot up seemingly overnight.

The apes’ agenda is all that matters to apes, and that’s bad news for Aron

And then came the tales of ruin on the way down, harrowing stories of people who had bought in at the highs and seen bets they’d made with money they couldn’t afford to lose crater. In the eyes of apes, AMC’s share price has been manipulated by Wall Street, with hedge fund giant Citadel, headed by billionaire Ken Griffin, taking on the role of chief villain in their story. AMC’s retail investors believe that short-sellers are trying to bankrupt AMC, and that it’s their duty to somehow teach these pessimists a lesson. All they care about is furthering their agenda, no matter how misinformed it is.

Now, he said he has 3.2 million retail shareholders who own 80% of AMC so he’s taken to Twitter to communicate with them. He noted in a nod to the Reddit and Robin Hood crowd, who refer to themselves as “ape” investors, that AMC will donate $50,000 to the Dian Fossey Gorilla Fund. So now we’ve gotten to the point where a firm is going to spend shareholder money to acknowledge a joke term for what these unsophisticated, momentum investors are calling themselves. He also oversaw AMC’s investment in a gold mine, which has nothing to do with movies but is indeed a novel idea.

1. The proxy vote was to allow for the issuance of up to 500 million shares.
2. By pushing back against the 500-million-share proposal — AMC eventually pulled this proxy vote — apes denied the company the opportunity raise capital to put itself on better financial footing.
3. Even though John and Jane Q. Public have been putting their money to work in the stock market for more than a century, they’ve never rocked the boat quite like they have in 2021.

Under-$10 Dividend Stocks With Buy Ratings That Wall Street Loves

In what can be considered bad timing, AMC released its preferred stock class, called APE units, on Aug. 22. Some investors received APE units in the form of a dividend payout prior to the preferred class actually beginning to trade. Now, the class has officially begun trading, but it won’t be seeing immediate success due to the stock’s current volatility. Since the year began, retail investors have been making their presence known on Wall Street. Even though John and Jane Q. Public have been putting their money to work in the stock market for more than a century, they’ve never rocked the boat quite like they have in 2021. GameStop, which didn’t respond to repeated requests for interviews or comment, hasn’t taken a single question from analysts on its earnings calls since the craze unfolded around it in early 2021.

In the meantime, investors would be wise to be cautious when trying to benefit from meme mania. Sure, there’s a possibility of another squeeze sending shares back toward their all-time high of $72.62 per share. Yet, compare that to the downside risk of the bottom falling out if/when the “apes” cash out. But it’s doubtful this will do much to counter the secular decline movie theaters are experiencing. AMC’s preferred equity dividend, aka APE, has been automatically distributed to existing shareholders.

As we’ve said numerous times in this space, the worst positioned companies are those with negative coinjar reviews cash flows and near-term debt maturities. For instance, GTT, another recent favorite of the Reddit crowd, is a telecommunications company that’s facing bankruptcy. It still trades on the NYSE despite not having issued public financials for over a year. It currently trades at around $2.50/share, down from $4 a few days ago. But management’s latest plan is to wipe out their shareholders entirely. GTT bonds, which are senior to equity, trade at just 12 cents on the dollar.

Collins is indicative of the investing set behind the extreme price movement upending the shares of GameStop, AMC and other companies like Wendy’s and BlackBerry–seemingly irrespective of their corporate fundamentals. (To use these investors’ slang, these are meme stocks or, put with crude humor, “stonks.”) Collins has no formal finance education and is not some professional investor stationed behind a Bloomberg terminal. He maintains a day job while living on the web as much as possible.

NYSE: AMC

The ape agenda also requires bringing in new retail investor capital, which would presumably be tougher to do if AMC were even modestly diluting existing shareholders. Nevertheless, the cash flow data is pretty clear that the company is going to need to sell additional shares if it’s to survive for years to come. Since the late January short squeeze, AMC’s ape army has had two separate instances where they genuinely could have saved AMC. Both times, they chose to tie CEO Adam Aron’s hands and favor their own misguided agenda over helping out the company they swore to protect.