How AMC CEO Adam Aron embraced the company’s meme status and helped send its stock to unfathomable heights

amc saved by silver lakes private equity adam aron 2x1
  • AMC CEO Adam Aron has reached out to the army of retail investors backing his company.
  • He’s taken to Twitter and YouTube to reach them, and has even picked up popular Reddit investing lingo.
  • Analysts say the new communication strategy could be to help shore up the balance sheet and get more patrons to the movies.
  • See more stories on Insider’s business page.

Adam Aron is a CEO for the meme-stock generation.

Aron, the 66-year-old chief executive officer of AMC Entertainment, has embraced the company’s status as a meme stock in recent months during earnings calls, on Twitter and YouTube, in press releases, and even in monetary donations. He’s even offered free popcorn.

The more than 3 million retail traders holding shares of the company have helped drive AMC’s stock price up about 2,300% this year.

The individual investors, mobilized on Reddit investing threads and Twitter, call each other “apes,” and to them, Aron is “Silverback” – a gorilla pack leader. “All hail the silverback,” one Redditor said in a Friday post.

The Harvard Business School graduate has bucked the trend of other CEOs who have remained virtually silent on their company’s status as a retail-trader favorite and instead reached out to the horde of fans of AMC stock.

On the May 6 earnings call, Aron called them “an army of passionate, interested individual shareholders.”

“They own AMC. We work for them. I work for them. So, by definition, their interests and passions are important to AMC. Their interests and passions are important to me,” he said, according to a transcript from Seeking Alpha.

The millions of traders make up about 80% of the company’s shareholder base.

“Why would you not recognize them? Why would you not embrace them?” Steve Sosnick, chief strategist at Interactive Brokers told Insider. “Management is supposed to be working on behalf of the shareholders, and those are your holders.”

Aron may be signaling a new era of communicating with individual shareholders, said David Jones, Chief Market Strategist at European investment trading platform, Capital.com. AMC and Aron did not respond to Insider’s request for comment for this article.

“We are used to CEOs speaking at stuffy shareholder meetings, and only showing interest in their large institutional investors,” Jones said. “With Mr. Aron taking part in, for example the Youtube discussion on Thursday, he really is opening up to a whole new area of investors that perhaps in the past companies may have appeared to be somewhat dismissive of.”

Read more: A quant-trading chief breaks down a simple 2-step method for finding future meme-stock candidates – including 2 he thinks could pop next after AMC’s 2,500% surge this year

Free popcorn

On the earnings call, Aron said the company’s communication would change in light of its new investor base.

“You’re going to see a lot more outreach to literally millions of investors in our company,” he said. “And it’s going to be quite public. I’ve started tweeting again.”

His Twitter account had been relatively dormant since his time running the Philadelphia 76ers, but now he often tweets multiple times a day.

“I have started to follow Apes, about 500 so far, to get a first hand sense of what our community is thinking snd saying,” he tweeted on May 15.

He’s also retweeted a poll from a fan account of Wall Street Bets, the Reddit thread with more than 10 million followers that originally made its name driving up shares of GameStop earlier this year. He’s even shared a photo of a gorilla and a video of a plane flying with the flag “AMC to the moon,” a popular phrase among retail traders referencing a meme stock’s price potential.

On June 3, the CEO reached out to his shareholders in a YouTube video with Trey’s Trades, a popular retail investing channel with nearly 300,000 subscribers. He referenced the investing “apes” as he made an argument for the company’s hope to sell 25 million more shares.

The “ape” references don’t stop there. Aron announced on an earnings call that he would donate $50,000 of his money and $50,000 of AMC Cares money to the Dian Fossey Gorilla Fund, which helps endangered gorillas in Africa, as noted in the 1988 film “Gorillas in the Mist” – which he dubbed “extraordinary and heartwarming.”

“The passions of our shareholders become our passions, too,” he said on the call.

On June 2, AMC announced a new initiative called AMC Investor Connect, in which company shareholders can get perks, like free popcorn, and direct communications with Aron.

Playing with fire

All of the outreach to retail traders could be a multi-faceted endeavor, market analysts told Insider.

The company has a heavy debt load and has flirted with bankruptcy in the past. The COVID-19 pandemic presented another set of hurdles as movie theaters shuttered and more entertainment options became available for streaming.

“I certainly tip my hat to the CEO who was in a tough desperate situation and has made the most of it to keep his business alive and maybe even one day thrive,” said Richard Smith, an investing and market cycles expert.

As shares rallied to all-time highs this week, the company issued more stock. Thursday alone, the company sold 11.6 million shares for $587 million after a $230 million sale of $8.5 million shares to hedge fund Mudrick Capital, which the hedge fund later sold for a profit.

“If the market says that your stock is worth X and you have an opportunity to sell some of it at prices that really allow you to shore up your balance sheet in a very inexpensive way, I think you’d be imprudent if you didn’t do that,” Sosnick said.

“The AMC CEO is catering to the crowd because he knows they’re making shares more valuable. He’s happy to cater to the retail investors if they push up the share price,” said Lars-Alexander Kuehn, associate professor of finance at Carnegie Mellon University’s Tepper School of Business.

Smith, the CEO of The Foundation for the Study of Cycles, said Aron also sees the shareholders as movie-theater patrons.

“He needs those people to support his business,” he said. “It’s incredible PR for a business that desperately needs people to get up and go to the movies.”

But Smith said, Aron is “playing with fire,” as the focus has shifted to share price instead of future earnings.

“I think he’s certainly encouraging the idea that we will all be buying and selling things with memes by embracing it as unapologetically as he has, and I think that could definitely come back to bite him in a big way.

But hey what’s the difference between him and Elon Musk? Tesla would not be where it’s at today if it wasn’t for Musk’s memes.”

If you’re a Millennial or Gen Z investor willing to share your investing experience, reach out to the reporter of this article at ndailey@insider.com.

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Reddit traders pushing AMC stock have helped add over $120 million to CEO Adam Aron’s fortune since the start of the year

amc saved by silver lakes private equity adam aron 2x1

  • AMC’s rising stock price has added over $120 million to CEO Adam Aron’s fortune.
  • Aron owns roughly 4.8 million shares of AMC and hasn’t sold since the Reddit rally began.
  • Short interest in AMC remains high at ~20% despite Reddit traders burning short-sellers for $2.29 billion this year.
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AMC’s chief executive officer Adam Aron has been reaping the rewards of Reddit traders’ push into heavily shorted stocks.

The CEO has seen his fortune jump by over $120 million since the start of 2021 as AMC’s stock has risen roughly 1,500% amid a Reddit-induced rally.

Aron owns or has been granted roughly 4.2 million shares of AMC stock, and unlike other executives, he hasn’t sold since the start of the year, according to CNBC.

The CEO did gift over $15 million worth of shares to his two sons in March, but beyond that, Aron has managed to net over $120 million in paper gains on his stock holdings by simply not selling.

AMC has been the target of Reddit traders for months now due to its high short interest. Traders on the platform have been attempting to squeeze short-sellers out of their bearish bets, causing AMC’s stock price to rocket higher.

Even with the Reddit crowd targeting AMC for months, and a surging stock price, the company’s short interest remains high at around 20% of outstanding shares, according to data from S3 Partners.

In 2021, AMC short-sellers have lost $2.29 billion as well, but that hasn’t stopped them from doubling down.

Last week alone, short-sellers added 2.97 million shares to their bearish bets, all while paying an 8% fee for the privilege, S3 partners data shows.

Despite AMC’s recent rise, analysts remain mostly bearish on the company’s long-term prospects as the theatre business remains in secular decline.

Capital Market’s Alan Gould reiterated his “sell” rating and $1 price target on shares of AMC recently, saying the stock “does not reflect fundamental value.”

AMC recently raised $230.5 million in cash from Mudrick Capital, selling 8.5 million shares for $27.12 each, a dollar higher than the stock’s Friday closing price. However, just hours later, Mudrick Capital sold its stake and called AMC overvalued.

Even with Mudrick’s exit, AMC’s stock jumped double digits on Tuesday as Reddit and retail traders continue to pile on, and shares of AMC traded up 21.76% as of 9:15 a.m. ET on Wednesday morning.

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AMC climbs 9% as CEO makes pledge not to sell newly authorized shares this year

adam aron, AMC CEO
AMC CEO Adam Aron.

  • AMC climbed as much as 9% on Thursday after its CEO said the company won’t sell any of the 500 million shares its seeking to authorize.
  • Adam Aron said if the company needs to raise short-term cash it still has some shares left from a prior authorization.
  • AMC, which has been a popular meme stock, is now up more than 365% in 2021.
  • See more stories on Insider’s business page.

AMC Entertainment shares climbed as much as 9% on Thursday after CEO Adam Aron said it will not sell in 2021 any of the 500 million shares it’s asked investors to authorize.

The company’s shareholders will vote on May 4 on whether to approve AMC’s request to increase its number of shares outstanding, which Aron plans to deploy in the coming years.

“We hereby pledge at AMC that if the shareholders approve this authorization for 500 million new shares to be issued, we will not use one of those 500 million shares in calendar year 2021. Not one,” CEO Adam Aron said in an interview published Wednesday on a YouTube program called Trey’s Trades, hosted by an independent investor.

AMC included Aron’s comments in a Thursday filing with the Securities and Exchange Commission. The company has roughly 450 million shares outstanding, according to Bloomberg.

The movie-theater operator has been working to recover from the hit the business took from the COVID-19 pandemic. The chain recently started to reopen its theaters after they closed to help reduce the spread of the respiratory disease.

Aron said in the YouTube interview that AMC still has about 43 million shares outstanding that were authorized in 2013. The company could use those shares to raise cash in the short-term if needed but that no decisions have yet been made on that matter, he said.

Asking for authorization to issue 500 million shares is part of the company’s preparation for operations on a longer-term basis, Aron said.

“If you give us the flexibility to use those shares when it makes sense for you, the shareholder, that’s when we’ll use them and not before,” said Aron.

AMC stock has surged from about $2 at the start of this year in part during major short-squeeze rallies that were fueled by retail investors active on Reddit’s Wall Street Bets forum. Shares are up more than 365% year-to-date.

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AMC drops as movie-theater chain’s CEO again discusses potential issuance of 500 million shares

AMC Entertainment
  • AMC shares fell by more than 6% during Thursday’s session after the company reiterated plans to issue 500 million shares.
  • The movie-theater chain’s CEO sees an “opportunity” to bolster cash reserves and make other operational moves.
  • “We’ll be sensitive to dilution issues,” said AMC CEO Adam Aron on CNBC.
  • See more stories on Insider’s business page.

AMC shares fell Thursday after the movie-theater chain’s chief spoke about the company’s plan to issue 500 million shares.

AMC in a March regulatory filing said it wanted to increase the number of shares to total more than 1.02 billion and for shareholders to vote on the matter on May 4.

“We’ll be sensitive to dilution issues, but at the same time there’s an opportunity to bolster our cash reserves and there’s an opportunity to buy back debt at a discount or pay deferred theater rents,” AMC CEO Adam Aron said on CNBC’s “Squawk on the Street” program. “There are a lot of good reasons for shareholders to give us the authority.”

The company is already seeing benefits from the vaccination of millions of Americans from COVID-19 as well as from the release of new movies, Aron said.

Shares of AMC fell by as much as 6.3% to $9.56 before trimmed losses to 5%. The shares, which have grown in popularity among investors on Reddit’s Wall Street Bets forum, have leapt from around $2 each at the start of 2021.

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