AMC stock tumbles premarket ahead of $APE debut

Yahoo Finance Live anchors discuss AMC stock performance ahead of its $APE listing debut.

Video Transcript

JULIE HYMAN: All right, let's move on to thing three this morning. AMC shares, we are watching them closely as we are the other meme stocks. The shares are tumbling, 36%, as AMC prepares to debut its APE, those AMC Preferred Equity shares today. The APE shares, part of a larger effort by the theater chain to assist in raising cash and reducing debt.

And the backdrop, by the way, remember, we talked last week that Cineworld might declare bankruptcy. It seems as though the company is going ahead and doing that. And so that calls into question, again, the fundamentals of the company.

Sozz, you know, the CEO Adam Aron has pushed back and said, you know, AMC has ample cash on hand. And who knows what's going on with how the shares are trading this morning. I think when it comes to meme stocks, there's a lot of sort of dynamics under the surface that we don't entirely understand.

BRIAN SOZZI: Julie, the APEs are indeed out this morning. Ahead of this APE debut on the New York Stock Exchange, my Twitter feed has not stopped going. And to all those folks tweeting at me, some of these putrid things, I mean, relax, OK? We're just out here, we're pouring the news and these stocks-- and this preferred stock eventually trading on the New York Stock Exchange. We understand the mechanics. Chill the heck out.

Now, I will note this, that the Cineworld bankruptcy mentioned, Julie, it's very important. It takes me back to what we saw when a lot of the retailers were going bankrupt 10, 12 years ago. When one announced, it would just cause a cascading effect.

So when you have a Cineworld declaring bankruptcy, you have to worry about, well, does it mean shuttered movie theaters? Does it mean discounted prices? How does AMC get swept into this?

Now, they have raised a lot of liquidity, whereas perhaps AMC becomes an even more of a consolidator in this space. But again, you don't want to see the second largest movie chain in the world come out here and declare bankruptcy. It will have some form of fundamental blowback on AMC, even if the APEs don't think about it this morning.

BRAD SMITH: Well, the critical thing is where they're actually getting the turnout for people in terms of that foot traffic coming back in for some of the blockbuster films, whether it's "Top Gun," whether it's "Batman," over the course of this year. I mean, and the context here, of course, being that a third of their revenue, roughly, for Cineworld, it comes in from concession sales.

So if you have a consumer that is already realizing, we're paying more where there is some of the price fluctuation in the number-- or in the type of film that we're going to see because of those blockbusters that have been testing more of those pricing levers. If you're already seeing a higher ticket price, how much less, perhaps, are you spending on some of the concessions, even when you are in that experience?

You've had everything from "Jurassic World Dominion" or just dinosaurs number 15, at this point, that you've been able to go into the movie theater and see. Or if you're a fan like me of "Minions," you've been able to take advantage of some of those. And those have been performing strongly.

It's a larger question of-- for Cineworld, where do those margins start to come in? And the concessions typically are where that is at. And that's why I make that point about where the revenue is actually coming in from at this point in time.

JULIE HYMAN: Did you see "Rise Of Gru?"

BRAD SMITH: I didn't see "Rise of Gru," but I want to.

JULIE HYMAN: Yeah, I want to see that, too.

BRAD SMITH: Yeah.

JULIE HYMAN: Now, we just showed a board of the other meme stocks this morning, which I think we have to talk about as well because we've had this resurge-- as we've had risk on resurgence in the entire market, right? Where we've seen stocks overall bounce. These guys have definitely participated, but in particular, the last couple of weeks.

That all seems to be melting away. At least for now. The past couple of sessions have been really rough for many of these players. GameStop is down 6% this morning. Bed Bath & Beyond is down 15%, really continuing its tumble since Ryan Cohen said he was going to be selling shares.

So you know, this is a group-- if we can even call it a group. A loosely, loosely affiliated group, right? That is now seeing a little bit of trouble here. And we'll see if it comes back again as it has before.

BRIAN SOZZI: Yeah, these folks are left holding the bad, guys. And that was my Morning Brief newsletter this morning. It's on the Yahoo Finance homepage. I wrote a letter to the meme stock community. And the bottom line is this, I know they want to come out here and support Ryan Cohen. They talk about them very favorably still in the Reddit chatrooms. But he is not your friend, guys.

Understand, Ryan Cohen is a billionaire investor-- or a billionaire trader trying to make a lot of money, just like a lot of the folks on Wall Street. So he's not your friend. If he has to run you over in his pursuit of boosting his own profile and boosting his own wealth, he is going to do it.

Now, where I would be concerned-- there's a Bloomberg report, Julie, out this morning that Bed Bath & Beyond is now having shipments not being sent it. So we reached out to Bed Bath & Beyond for comment, they did not return our requests for comment. But this is what we talked to two analysts last week, and they were voicing concern. That could be the next shoe to drop.

We have seen that play out at Sears. When vendors stop shipping product to a retailer because of fear that they're going to get paid or not get paid, that is a huge red flag, especially in the middle of the back to college shopping season and ahead of the holidays.

BRAD SMITH: Yeah, a group of sorts, if you will. But perhaps just short interest number neighbors as well, if we can categorize them that.