AMC Apes Hate AMC’s APEs

I have previously expressed my fondness for AMC Entertainment Holdings Inc.’s APEs scheme. AMC was a big meme stock and had a lot of investors who wanted to buy its stock; it also needed a lot of money and was happy to sell stock to them. But its corporate charter only allowed it to issue about 524 million common shares, and AMC was running out of stock to sell. It asked its shareholders to authorize more shares but — well, they didn’t exactly say no. What happened is that AMC withdrew the request for more shares because it couldn’t get enough votes, and it couldn’t get enough votes in part because its existing shareholders were worried about dilution, but also in (probably larger) part because AMC’s overwhelmingly retail investor base simply doesn’t vote. Retail shareholders tend not to vote much on anything; they are hard to reach, and voting your shares is confusing and pointless enough that ordinary retail investors rarely do it.

But AMC needed a majority of all of its shares to vote to authorize new shares; not voting is equivalent to voting no. So AMC had people who wanted to buy stock, it wanted to sell them stock, and it (probably) thought that its shareholders wanted it to issue more stock — but it couldn’t reach those shareholders to get them to vote to approve more stock.