FILE PHOTO: An AMC theater is pictured in Times Square in the Manhattan neighborhood of New York City, New York, United States on June 2, 2021. REUTERS / Carlo Allegri
June 3, 2021
By David Randall and Sinéad Carew
NEW YORK (Reuters) – Free popcorn for shareholders. Follow over 500 die-hard fans of his company’s stock on Twitter. Retweeted a video of what appeared to be an airplane flying a banner around Manhattan with the meme stick rally calling out “AMC to the Moon”.
Welcome to the world of AMC Entertainment Holdings Inc’s CEO, Adam Aron, who, since the beginning of the year, has taken the role of chief promoter of a company that was on the verge of bankruptcy to new heights.
At a time when many on Wall Street are arguing that the cinema operator is overrated and in desperate need of an accelerated economic recovery from the coronavirus pandemic to justify his stock price, 66-year-old Aron relies on the growing power of the individual Investors who let so-called meme stocks rise
“Beware of naysayers, AMC will play on the offensive again. Here we come! “Aron wrote in a tweet from June 1st https://twitter.com/CEOAdam/status/1399683077660721152.
He’s riding a wave of excitement for the stock. AMC stock is up nearly 3,000% year-to-date and nearly doubled on Wednesday, closing at $ 62.55 per share, well above Wall Street analysts’ average target price of $ 5.11, according to Refinitiv data . AMC is now valued at $ 28.2 billion based on Wednesday’s closing price.
Aron, who became CEO in 2016 after running the National Basketball Association’s Philadelphia 76ers, began promoting AMC after a retail spending spree on its stocks in January.
AMC did not respond to a request for comment and Aron did not respond to a direct message on Twitter.
Aron is part of a growing number of Wall Street executives like Elon Musk of Tesla Inc and Ryan Cohen, future chairman of GameStop Corp., who appear to be courting retail investors rather than institutional investors.
“These individual investors likely own the majority of our shares,” Aron said during the company’s conference call in May. “You own AMC. We work for you. I work for you. “
Some analysts are skeptical that such show manipulation will prop up AMC’s share price in the long term. There are no actively managed equity funds among the company’s 20 largest shareholders, according to Refinitiv data, leaving open the risk that a change in sentiment by retail investors could quickly plunge the stock.
“The Twitter horde loves him. He plays with the crowd and it works, ”said MKM Partners analyst Eric Handler, who questioned AMC’s stated strategy of issuing new shares to raise capital. “He would be better off improving the balance sheet and adding some stability to the business,” he said.
Michael Pachter, an analyst at Wedbush Securities, said selling enough movie tickets and popcorn to justify a $ 40 stock price for the company – where it was trading early Wednesday – would require earnings to be up against its own Estimates of $ 322,000 per screen for 2022 nearly double movie tickets and $ 6 per person for food and drinks.
“It’s hard to see why AMC would double its historical average,” he said.
Aron, whose career spanned a decade as chief executive of Vail Resorts Inc and one of the leading Starwood Hotels and Resorts Worldwide Inc., has been more focused on connecting with consumers than retail shareholders in his previous leadership roles.
At the 76ers, for example, he was involved in lowering ticket prices, at Vail Resorts he was instrumental in expanding the company into a nationwide business. The company’s shares fell nearly 4% when he announced his resignation in 2006.
Promoting a company’s shares to retail investors could be the new reality for many companies, said Jim Paulsen, Leuthold Group’s chief investment officer.
“CEOs have always been showmen and a large part of their job is putting on shows for institutional investors,” said Paulsen. “You may have a Reddit group that is the focus of the tweet, but the reality is that institutional guys like me will find out about it just as quickly.”
(Additional reporting by Krystal Hu; editing by Megan Davies and Leslie Adler)
This article originally appeared on www.oann.com