The AMC & APE Stock Disaster.

well it's official AMC has voted on what

is going to happen with the ape units

AMC is saving the ape units according to

shareholders that is apparently uh Adam

Aaron and shareholders have voted in

unison to allow and authorize the ape

units to essentially merge with the AMC

units basically what this does uh is it

allows AMC to issue more shares that was

always the issue with AMC they had a lot

of debt and their goal was to be able to

minimize the debt well usually the way

you minimize debt is you raise Equity

but AMC was restricted by shareholders

they weren't allowed to raise any more

Equity they weren't allowed to issue any

more shares basically so instead they

came up with this stock split idea and

made these ape shares which supposedly

had equal value as the AMC shares and

then they made these AP e shares

basically diluted the crap out of the

AMC ones that's why the AMC shares

plummeted and then the ape shares

plummeted even more because there is no

guarantee those would ever convert to

AMC shares which is basically exactly

what I said many months ago when I

warned against holding the ape share

units because I warned they would go

under a dollar I sold mine at eight

dollars sure enough ape ended up going

under a dollar it's sitting somewhere

just over a dollar now but anyway

shareholders have officially voted

they've officially decided to allow the

ape shares to merge with the AMC shares

and as you would expect that is

compressing the valuation of actually

both of them that's because really the

leftover shares at AMC will all now be

worth less AMC shares were down 15

percent just yesterday on this down to

4.64

ape shares you would have thought would

go up because of the Arbitrage but they

actually went down they're down 5.2

percent at a buck 64. and the reason for

that is likely because there's still a

lawsuit this has to get through Adam

Aaron tweeted yesterday saving AMC is my

professional Mission and remember I own

millions of AMC shares and ape units too

I'm very much want for AMC to succeed

I'm absolutely passionately convinced

that what you approved today is in the

best interest of AMC and shareholders

right because remember the goal of AMC

is to get rid of their debt that America

goes on to say so what happens now we

cannot Implement what you approved today

until the litigation in Delaware courts

is resolved the next court hearing on

the matter is set for April 27th we will

hear we will update stockholders when we

have additional information

unfortunately a court hearing means next

to nothing usually legal matters can

take years to resolve and you could

potentially be Diamond handing ape and

AMC for years waiting for that legal uh

claim to actually resolve itself before

these two share years end up actually

merging together in the meantime AMC

continues to burn a lot of cash I'm

personally a big fan of actually looking

at the fundamentals and knowing what is

inside of the reports of the companies

that you invest in and it's not that

spectacular unfortunately so the first

thing I want to do is go over to the AMC

cash flow statement because AMC and

their earnings call regularly brags

about how much cash they have available

in fact let me show you that first so

the AMC there it is let's see here and

this is the AMC earnings call here they

brag about how they're reducing their

debt on lease obligations which is nice

we want to see them reduce debt that's

fantastic they talk about how they're

potentially doing better than their

competition how they've announced their

new uh AMC popcorn with a Walmart

partnership it's perfectly popcorn is

apparently what it's called they're

talking about how box office is opening

up they talk about how they ended the

year with over 840 million dollars of

cash quote or undrawn revolving credit

line now that's actually really

important because if you say you have

840 mil of cash it's very different from

saying you have 840 million in cash

and a credit line because that basically

means like hey maybe we have a hundred

mil of cash and we're able to draw on

debt and have more debt but the whole

point of AMC is to try to get out of

debt not draw on more debt right so

anyway the first thing I like to do is I

like to look at the cash flow statement

for the company as of the end of last

year the company burned 840 million

dollars in the year in free cash flow

that's that's uh 70 million dollars a

month in free cash flow being burned

that's created by 628 million dollars in

operating losses plus about 202 million

in capital expenditures when we actually

look at the assets the good news is they

do have 631 million in cash so it's

really 631 million in cash and the other

about 200 on that undrawn credit line

they do have some receivables here as

well but just looking from a cash point

of view they've got about enough cash to

lose as much money this year as they did

last year but if they get to that point

they would be bankrupt because then

they'd be upside down so in other words

they need to do everything that they can

to raise money now that's why they

created the ape units unfortunately of

the AP units that they were able to I

hate to say this quote unquote dump on

normies they only dump them at a share

price of about 2.25 cents which is

unfortunate because had they dumped when

Kevin dumped they would have been able

to dump for about eight bucks and they

would have realized somewhere around

three and a half times as much money but

anyway uh they didn't do that they

waited like a month before they dumped

we knew this was going to happen uh I

mean this was so obvious but whatever so

uh now one thing that is good news is

they're operating oh sorry quick note if

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wealth use that St Patty's Day link down

below what is good news is their

operating costs their operating Leverage

is positive so if you're looking for

some kind of good news they increase

their operating cost by 28 while they

increase revenues by 54 that's fantastic

but do remember that even though at the

end of 2022 we were knocking on the door

of 2.2 actually just over 2.2 billion

dollars in admissions that still is only

54 of where they sat in 2018. now their

food and beverage revenue is sitting at

78.6 percent of 2018 level which is good

it's a sign that people are you know

still buying a lot more junk at AMC with

a high profit junk possibly because you

know a lot of people are very

sympathetic to AMC I'm as well when I go

to an AMC theater I actually purposely

buy the stuff I ordinarily wouldn't buy

I purposely buy the sodas that

ordinarily you would sneak in now you

buy it there as sort of Charity because

it's the money losing business kind of

like the Cheesecake Factory I go to The

Cheesecake Factory and I'm like I feel

like I'm eating at a charity because

they lose money which is kind of sad

because the stuff there is really

expensive anyway the company's burning

nearly a million dollars a day in

interest expense uh that is because the

year-ended interest expense was about

336 million dollars and obviously

there's 365 days in a year so obviously

the company is spending money like crazy

I have absolutely no idea how they

actually expect to go profitable I don't

I don't see that path to profitability

even with these numbers up they had an

operating loss of 522 million dollars

that for a net loss of nearly a billion

dollars on on a gap basis if we go all

the way back to the 2018 report uh maybe

maybe there's a little bit of Hope

because they actually had operating

income of 265 million dollars in 2018

uh unfortunately then when you actually

a factor in operating uh or should I say

corporate borrowing some interest

expense you get to net earnings of only

110 million dollars uh the year before

that they had a loss of nearly 500

million dollars and they've kind of

always been bouncing around an income of

around 100 million dollars but right now

they're losing about a billion dollars

so they've got a long way to go free

cash flow pretty dang Negative they

really really need to figure out how to

get out of debt but honestly even if

they had zero debt they'd still be

pretty largely upside down so I guess

the bottom line is if I were an AMC

shareholder which I'm not I I you know I

a couple years ago I bought some AMC

shares and I promised I'd hold them for

a year I held them for 16 months and

then I sold part of the community that

was that was the goal and that's exactly

what I did but uh now now what you

really have is some resentment and

frustration actually coming up in the

AMC Community there's pretty much not a

single tweet from from the CEO that

doesn't get a bunch of replies from

people basically upset uh people saying

they've lost 90 of their money that

they've invested into uh AMC that they

should have never invested in AMC that

they wish they dumped their Apes stocks

like me Kevin said many months ago at

the same time as you have the CEO

promising he stopped selling stock he

only made that promise after he dumped

42 million dollars of AMC stock on quote

unquote the normies at the same time he

tries to justify his dumping and the

dilution of AMC stock by blaming the

hedge funds AMC CEO has now reached out

about failed to Deliverance oh my God 36

billion dollars worth of failed orders

there must be naked shorting going on he

says basically what he's trying to do is

he's trying to jerk off the retail

investors who still believe in this moas

coming and he's trying to justify that

he really is the ape out there trying to

save retail but the reality is this is a

failing business model and while it's

possible it seems extremely unlikely

that the stock is going going anywhere

in the near term specifically because of

the overhang of the lawsuit but even

when their lawsuit completes the company

didn't raise a lot of money all they

managed to do was massively dilute AMC

shareholders so the biggest concern for

me is a law if if you were a longer term

shareholder would be the actual

fundamentals and the fundamentals are

not getting that much better the annuals

for 2022 were not that great and yes

there is hope because hey maybe the box

office is going to look a lot better

this year that is true box office does

look like a lot better uh that is that

is your hopium right now I mean take a

look at this right here if you want

hopium right here they do talk about the

problem of generating audiences and and

being quite different after the pandemic

however they do hope that with maybe 30

or more movies coming that'll gross over

100 million dollars in 2023 maybe they

could do very well but remember what you

have is you have people in this sort of

space demanding a whole lot more wages

these days uh you know Walmart

McDonald's everyone raising prices and

sort of this retail and Hospitality

space in terms of wages right it's not

indicative of wage price spiral it's

indicative of sort of a lagging of wages

that should have gone up a while ago but

anyway AMC is probably going to face

those sort of wage increases as well

you're facing recessionary environment

at the same time as you basically have

less than a year of cash left not super

excited about the future prospects but

hey you know what the CEO seems to be

pretty excited this is coming at the

same time as insiders sold 76 million

dollars worth of shares in the last 12

months while at the same time out of the

one side of their mouth saying we are

with you on the other side of their

mouth saying we sold 76 million dollars

of shares see that's not good

unfortunately that's bad and it sucks

and we obviously know what selling

pressure does to a stock from insiders

when all you have to do is look at what

happened with Elon Musk Elon Musk sold

24 billion dollars worth of tassel

shares last year created the perfect

down Channel which just increased the

shorting because it was the easiest

stock ever to short retail only net

bought 15 billion dollars of Tesla

shares last year so basically retail

normies got dumped on including me I got

screwed by that too so unfortunately uh

for AMC the fundamentals for AMC are

substantially different from those for a

company like Tesla so at least one of

those two has hope