Tuesday's Headlines: AMC Issues New Stock and Investors Balk

Tuesday's Headlines: AMC Issues New Stock and Investors Balk

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Wynn Resorts (WYNN) +12.0%

Chegg (CHGG) +9.1%

Huazhu Hotels Group (HTHT) +6.2%

Trip.com Group (TCOM) +5.3%

Trupanion (TRUP) +3.5%

Moving Down ⬇️

Stitch Fix (SFIX) -7.7%

StoneCo (STNE) -5.8%

Farfetch (FTCH) -5.5%

Trex (TREX) -5.4%

Redfin (RDFN) -5.3%

Here are the stories that you need to know ahead of market-open today, Tuesday the 27th of September.

AMC Issues New Stock and Investors Balk 👎

Shares in AMC fell almost 15% yesterday after the movie theatre chain disclosed that it may issue 425 million AMC Preferred Equity Units, known as APEs. The move would help AMC raise capital to pay off debt or make other investments but shareholders don’t seem too enthused by the idea.

AMC first issued APEs back in August, when it released almost 517 million units to its class A common stockholders as a special dividend. At the time, CEO Adam Aron called it “perhaps the single biggest action we will take in all of 2022 to fundamentally strengthen AMC.” APEs have the same economic and voting rights as one share of regular AMC common stock but they trade separately under the ticker APE.

AMC had to do this rather than a traditional stock issuance because its large base of die-hard retail investors rejected the plan. These meme stock pundits are not interested in AMC’s $5.4 billion debt, all they want is the stock price to return to its June 2021 highs so they didn’t like the idea of dilution. APEs were a workaround as AMC could sell them without shareholder approval.

Unfortunately for AMC, since its first APE release in August, both its shares have taken quite a tumble, falling more than 75%. This means AMC will only stand to make about $1.5 billion from this share release, not enough to pay the cinema chain’s lofty debt. If AMC released all 900 million shares in August, it would now be debt free. You live and you learn.

Wynn Soars as Tours from Mainland China Recommence 🎰

Wynn Resorts (WYNN) was up big yesterday after an announcement from Macau officials that COVID restrictions would ease and tour groups from mainland China would be permitted to visit the region once again. Soaring 12% on the news and up again in pre-market trading this morning, Wynn investors are finally enjoying a rare win in what has been a tough couple of years for the company.

Plagued by ongoing COVID-19 restrictions, Chinese citizens have been restricted access to the island of Macau on and off since the outbreak of the pandemic over two years ago. As part of China’s ‘Zero COVID’ policy, restrictions have been much more strict than in the rest of the world. In fact, the island of Macau itself was even put on lockdown in July after an outbreak.

As you can imagine, this hasn’t been ideal for business, especially considering Wynn made the majority of its profits from the region before the onset of the pandemic disrupted its operations. Being at the behest of the whims of the Chinese government is not an ideal place to be, and while yesterday’s reprieve is progress, a cloud of uncertainty will hover over the stock until all COVID restrictions have been lifted in the region.

Wynn Resorts stock is down 24% year-to-date and 55% from its pre-pandemic highs.

Nautilus Management Considers Selling Up 💸

Shares of Nautilus are up in premarket trading this morning over reports that management is considering putting the company up for sale.

According to a press release issued last night, the Board of Directors of the at-home fitness equipment maker are currently undertaking a review of strategic alternatives for the company, one of which includes a potential sale. This, according to the release, is part of identifying “opportunities to accelerate the Company’s digital transformation under its previously announced North Star plan and enhance shareholder value.”

The so-called North Star plan in question relates to a long-term strategic plan unveiled by management in March 2021. This aimed to reposition Nautilus in light of the unexpected growth it had experienced during the COVID-19 pandemic, with key financial aspirations put in place that included $1 billion in revenues and two million digital members by fiscal 2026.

However, like industry compatriot Peloton (PTON), the lockdown boom didn’t last long for Nautilus. After reaching a decade-high of almost $30 a share in February 2021, the stock price has been on a downward slide ever since, currently down about 95%. As per its last quarterly report, the company had about 360,000 digital members and sales of $184.6 million — which was down more than 70% from the year previous.

A one-time member of the MyWallSt shortlist, Nautilus was founded in 1986 off the back of the boom of at-home fitness. The company merged with the famed Bowflex brand, while also incorporating the StairFlex brand at the turn of the century.

A public company since 1999, Nautilus struggled in recent years and was forced to stop selling equipment to gyms and refocus on direct-to-consumer sales. However, despite a brief resurgence as lockdown orders came into effect, company shares have plummeted again back to penny stock levels.

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