Okay folks, love it or hate it. I gotta give you my thought process on what happened today with Amc and then I want to talk about whether or not it makes sense to hurdle, sell, or even buy more Ape. Some people think Ape is the best thing in the world, others think it's worthless garbage. I will give you my thought process number three if there is future dilution in Ape.

Does that hurt the Amc share price even though they are technically separate. Amc's Sec 8k filing from August 4th states and I quote any dilution caused by future sales of Amc preferred equity units aka Ape could adversely affect the market price of the Amc Preferred equity units and and the common stock. Which means, of course, Amc shares itself. How is that possible? You think it'd be the opposite, right? And then finally, I want to give you my closing, honest thoughts on Amc stock and its ability to squeeze.

And full warning: Everything in this video is just my opinion and my opinion alone. based on my own research and just to be completely straightforward with you, this is going to be my last Amc video for quite some time, and the reason is because the situation is kind of like covering a controversial politician. You have two sides that have extremist views and opinions on that one controversial politician and they're both kind of going at it constantly and then you get stuck in the middle of it and then you have like 90 of the people that are just like, can you just tell it to us straight? Can you just tell us what's going on? But everybody just wants to talk about what the extremes are. You're either really really for something or you're really really against it.

You can't be like, oh well. There's actually nuances and little different details that you want to pay attention to. You're not really allowed to say that because then that hurts one of the sides or the other. I don't think that it's a stretch to say that.

over the last year, Plus, I've been more pro Ugabu Amc than I have been anti. But the minute that you start criticizing some of the things that you don't like, the minute that you start airing some concerns is the minute that all of a sudden things change. right? and all of a sudden you're an enemy. All of a sudden, you're a dirty, dirty shill for the hedge funds, right? And hey, you know what? I do wear suits in these videos, so I understand why some people would think that.

But the truth is that at the end of the day, I just don't want to deal with the toxicity that comes down with covering Amc. I want to present my viewpoint on it, and I want to talk about something else. Okay, so the Ape distribution came out today and Amc stock price tanked as a result, as was disclosed by Amc's filings. And as is common practice, when you distribute any sort of dividend, the share price tends to tank afterwards to factor in that distribution because the shares no longer have the right to that thing.

In this case, it was effectively like a split, but the dump got a lot of interest early on from the financial media like Cnbc, which had originally tried to pin this on competitors being in the bankruptcy waters. You also saw this reiterated pretty much all over financial media. You even saw The Guardian saying Amc stocks dropped sharply as investors sour on Meme stock rally movie feeder chain fell 31 while rival Sin World warns of potential bankruptcy filing, which quite frankly is inexcusable. Bad reporting If you actually look at Marketwatch's data which apparently adjusted to factor in the distribution, Amc was only down about five percent today, which actually wasn't that bad considering how much the broader market tanked.

So I just want to start by saying the way that Amc's price action was covered today was completely just completely off. The media tried to paint the picture that Amc was crashing because either Meme stocks were dying off or because other movie theater companies were on the verge of bankruptcy, which quite frankly wasn't true. It dumped because of the dividend. If you want to add up what the combined entity would be, you can go and add up Amc shares two ape shares and that's what the total value would be combined, which wasn't a 40 dump.

Okay, so moving on. if you were an Amc shareholder by record date, you probably now have eight or will have it soon depending on your broker. And so the question becomes: does it make sense to buy more, Hold or sell that Ape? Well, when we first talked about the Amc dividend about 11 days ago, I said straight up that in my view, the dividend is a creative way for Amc to dilute by bypassing shareholder approval and attempting to please the holders of the stock with the simple naming of it. The big question in my view, was, why not just issue more regular Amc shares if they want to raise more capital? And the answer to that is actually pretty simple.

That requires shareholder votes and shareholders are not supportive of dilution. The Ape shares, though, do not need shareholder approval. Thus, they can be deluded whenever the board needs to, right? And I will remind you that the company isn't exactly trying to hide this They're filing literally states: Emc Preferred Equity Units aka Ape provide Amc with a currency quote currency that can be used in the future to further strengthen our balance sheet, including by reducing our debt and other liabilities. And you've seen this before.

Everybody's seen this before, but I'm just trying to say it's clear what their intention is. they're not trying to hide it. Their goal is to promote the longevity of Amc and the success of Amc over the long term time horizon, right? Their goal isn't to support liquidity shortages to aid in the possibility of a near-term squeeze, their goal is to provide long-term value appreciation to the best of their ability. But when it comes down to your own position in Ape, does it make sense to hold part of your position in shares that can and most likely will be rapidly diluted? If you're someone that, for example, wants a non-dilutive stake in Amc, couldn't you just sell your Ape and then buy more? Amc wouldn't that effectively avoid dilution? What is the point of having Ape? The way that I see Ape is that it's essentially the piggy bank for Amc to raise capital, and the execs have the hammer to break that piggy bank at any point that they want.

This could be good or bad, depending on how you play it. If you look at the filing, it says theoretically over the lifetime of the security, the maximum number of Amc preferred equity units aka Ape that could be authorized over time is essentially 5 billion, up to 5 billion. However, the Amc board has only authorized the equivalent of 1 billion of these that can be issued. Now, 516 million have been issued in this dividend situation.

So there's 400 something million left. And it says here: the Emc Board currently has no plan or intention in calendar years 2022 or 2023 to authorize more than this initial 1 billion of Apes. However, Amc's board of Directors may authorize additional Amc preferred equity units at any time in the future at its sole discretion, including in 2022 or 2023 if it deems such an issuance to be in Amc's best interests. So first they say, oh, we've only authorized 1 billion ape, We don't have plans on issuing more in 2022 or 2023, But then they say we can authorize additional apes at any time in the future as our sole discretion.

Now, this essentially means that Amc execs have the ability to insanely dilute at any given moment. If it's at their sole discretion, they have the full hammer to break the entire piggy bank at any point. Now, there's a lot of people saying that it's fun to say that they can dilute heavily without shareholder approval. Again, this is what it says on their own filings.

So then the question becomes, what is the upside in holding Ape? Well, from a crowd standpoint, you want everybody around you to be buying and holding their ape. The reason? Because if people are buying and holding it, that means that Emc can rate that piggy bank that a piggy bank at better and better rates. Every dollar that Apralis is another dollar that Amc can raise if it issues more and more of those apes. Which means more money to strengthen their balance sheet right, and means more bullishness for Amc stock itself.

But if people sell ape and ape goes down to zero. Well, Amc's ability To raise capital with eighth gets handicapped dramatically. So from a crowd standpoint, you definitely want people buying and holding Ape. But from an individual standpoint, which I think this is the controversial part, it's probably not financially in your favor to buy and hold eight from a personal standpoint unless you're specifically trying to bail out Amc without regards to your own profits, and you just kind of want to stick it to the movement and the hedge funds and all that kind of stuff.

I don't see how it makes sense to own eight from an individual incentive standpoint. Emc stock itself is much much better off if people huddle Ape, but it's likely better for each individual not to huddle Ape, which is kind of like the catch 22 problem here. And I get it Charlie, you shouldn't be even saying that out loud, because by telling the truth, you are helping the short sellers. But the truth is, it is what it is.

Ape is now a piggy bank for Amc. It's important to note that yes, Ape can certainly go on a massive momentum run, and that would be excellent for Amc, But bigger picture, Ape in the long term is very, very inferior to actual Amc shares. Whether or not you want to buy and hold your Ape shares depends on whether or not you care about your personal incentive versus the group incentive. If you are trying to play a squeeze or appreciation game, Amc is likely going to be the better option by far.

If you are trying to support the Amc movement situation and you're not as concerned about profit on those shares, and you really don't care about profit at all really, then Ape can make sense. I don't say that condescendingly. I understand there's a lot of people that don't really care that much about the profit incentive. They're just kind of trying to stick it to the hedge funds and all that kind of stuff.

Which is fine. You can do what you want. I'm just saying it like I see it. And then there's an argument of wait a second, Charlie, But you can convert Ape to Amc common Stock.

So how does this make sense? Isn't Ape and Amc kind of worth the same? then? Well, no. If you look at the filings, it says only if the Amc board proposes and then investors vote to approve an increase in the number of authorized shares of common stock, can they be converted? So basically, if and rather, when Ape is diluted massively well, if for some reason, the board decides, oh, we want to convert it back to common stock, well, they're going to have to go and issue all of these new shares of common stock in order to recombine the two different shares. Which means what, while Amc stock's going to plummet when that happens, and it also means that the odds of Amc, the Amc board voting to convert, and Emc shareholders voting to authorize the conversion are very, very low because their equity is going to be destroyed in their main Amc shares. If you're somebody in like, late 2024 and you're all in Amc shares and there's a vote coming up where they're like, okay, well, it is time that we go and we reacquire All of these Ape shares that have been massively diluted.

Well, are you gonna vote to re-acquire all of those, even though that's going to mean issuing a ton more shares to Amc stock and thus diluting your equity holdings? No, you're not going to vote to do that. So again, at the end of the day, you can disagree with me if you want, but on a crowd level, Ape makes a lot of sense if you want Amc stock to go up, but on an individual incentive level, it doesn't make much sense at all. And I think that when folks start seeing dilution and waking up to that ape is going to bleed out a lot a lot faster. I think it might actually bleed out before the dilution even starts.

I think that shareholders have to ask themselves the question, why would you hold dilutive Ape? If you can instead hold Amc which doesn't have the approval to be diluted massively, why would you do it? It just doesn't make any sense and I think that's kind of the problem from an incentive basis. You could say, well, hey, the price of Ape is cheaper than regular Amc shares, but what is that really worth if they don't have to be converted back to Amc shares at any point unless the Amc board votes on it and shareholders agree. And if they do, Amc stock would have to issue a lot more common shares anyways. Which brings me to the next thing.

If you do some digging Amc's Sec filings say something quite strange. It says quote. Any dilution caused by future sales of Amc preferred equity units could adversely affect the market price of the Amc preferred equity units and the common stock. So how does that work, right? It kind of sounds counterintuitive.

You'd think if you raised capital with Ape, that would again be something that bolstered Amc shares because it balances out the overall fundamentals and the balance sheet well. The way that it works goes back to this convertible line and this is what you have to pay very, very close attention to because a lot of people don't understand how it could be dilutive if you don't dilute the same shares, right? See if Ape shares can eventually be converted back into common stock? That means that if they do get diluted, that means that the common stock in the future has a higher chance of being diluted, right? Because in order to reacquire them, you have to issue the same level of common stock that you did in order to dilute Ape. Now, like I said earlier in, like they say, the odds of Ape being reacquired by Amc is very, very low in any time horizon. that's anytime soon.

Like I said, I don't think this will come to a vote anytime soon and so the conversion probability is going to be low. But of course, if Amc all of a sudden does decide to go gung-ho and issue tons and tons of Ape, Well, that would be a shocker to Amc shares and people would wonder, hey, wait a second. maybe Emc is going to have to stabilize out eight prices by converting some of the Ape back into Amc shares, which would be a huge, massive bludgeon to Amc stock. I don't think the board is that stupid.

I think they're going to be a little bit more conservative than that with the share offerings, and I think if they can do it right, it's probably true that the drawback from dilution of Ape is probably going to be balanced out by the benefit to overall balancing out strengthening the balance sheet of Amc. And that kind of brings me over to the good news. Yes, I do have some good news. If you are someone playing a very, very long-term game with Amc, you can make a convincing argument that this will really boost the odds that the short thesis on Amc is significantly weakened.

Why? Well, because if short sellers want this to the ground specifically because they think it's going to go bankrupt, Well, the more capital that Amc can use and raise all of a sudden, be less likely that short thesis is to come true. We could talk about the movie theater business all we want, but the more capital Amc has all of a sudden, the less likely Shorts are going to get realized. Massive gains in this anytime soon. And I think that quite frankly, from an optimist perspective, it has somebody that has always rooted for oogabooga Amc.

I think that you could argue very, very strongly that a lot of the enthusiasm for Amc is still in this, and I think that even though it might be irrational to hold Ape enough, people probably will hold Ape, which will allow Amc to have the capacity to raise debt and to raise more capital overall at really, really good rates. Which means that the short thesis probably will be bludgeoned over time. and you combine that with a few big market wide rallies like we saw the last couple of weeks before it just got derailed. and all of a sudden you have more squeezing opportunities.

So I mean, hey, at the end of the day, I understand a lot of people think I'm a funny Mcfuster because I've been a little bit critical, but at the same time, I'm not terribly dull on the setup. I think that there's actually a pretty damn good setup here, and the name recognition is very, very strong because you just have so many people that are dedicated to see this through to the other side. And I like to say irrational rationality because so many people have decided to be irrational at holding the stock above its fundamental value. All of a sudden, you get into the situation where it could actually be kind of rational because you have so many people that are just willing to hold this out until death.

which in my view, eventually means that somebody's gonna have to give way. Either that's the short sellers or it's the holders of the stock. Personally, I think that this Amc Meme Revenge trade has unveiled a lot a lot of the corruption in the system and a lot of the problems that we deal with in many, many stocks. And it's educated a whole whole group of traders that otherwise would have never been interested in the market.

to all of the different dynamics that take place here. you can call me Fuddy Mcfudster or Shilly Mcshilster, but at the end of the day I support Amc. I hope it goes up to a hundred thousand a share. I don't know that it will, but I hope it does.

But at the end of the day you can trust that I will tell you like I see it, and if I see something going on in the company that I don't like, or if I see dilution, or if I see something that's not going to positively impact shareholders, I'm not going to lie and say that oh it will because oh no, you got to pump the stock as much as possible or people are going to be upset with you because that helps the short sellers have a good one folks and I'll see you in the next video.