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AMC stock plummets on $APE units debut

Yahoo Finance's Ines Ferré discusses how AMC's new APE shares are affecting meme stocks on Monday.

Video Transcript

- But of course, plenty of stocks catching attention on this Monday morning. AMC trading down as the theater company and meme stock officially hit the street with it's APE shares. You could see a red across the board, although there's a lot to kind of unpack here. Recall that what we're talking about here with APE is the preferred stock units that are issued to AMC holders as a special dividend. And as a reminder, here's how AMC CEO, Adam Aron, described it to our morning team on August 8th.

ADAM ARON: And now that we have a new security, a new class of security in preferred stock, that gives AMC the ability to raise capital at will. And what that does for our shareholders is many things. Number one, it takes survival risk off the table in the near term. But we can raise cash if we need it. That certainly is good for our shareholders. And if it's good for our shareholders, it's bad for the people who wish us harm. And there are a lot of people out there who wish AMC harm. Much to their chagrin, we've created these preferred stock.

- Aron talking to the haters there. He clarified over the weekend that the value of AMC investment, by the way, is now the combination of the AMC share plus the value of the APE unit. There's a lot to unpack here. Let's bring in Yahoo Finance's Ines Ferre for more on this.

Obviously, the meme community, very dialed into this. You're seeing a lot of buzz on the WallStreetBets board as well as on Twitter. Unpack all the action that we've seen this morning. AMC down as a function of this, not because there's necessarily selling pressure.

INES FERRE: Exactly, and AMC had said that their shares, they expected that they would be down as a function of this because they said that it would decline to reflect the fact that shares purchased on or after such a date would no longer be entitled to the dividend. And that's the APE units that you were referring to earlier.

So you really have to think about it this way, you have to think about it as Adam Aron had said, you have to think about it as the APE shares, and then you have to think about it as the AMC shares. And the combination of those is the value that you want to look at.

Now earlier this morning, we had seen that those APE shares had gone up to more than $10 a share. So if you look at where AMC is trading, AMC is trading at around $11 a share. So that would be a combination of about $21. And we know that AMC stock on Friday closed at $18.02 a share. So if you had purchased AMC at around $18, you would be making a profit on that.

But right now, we are watching APE shares that are down at around $8, yeah, $8.10 a share. So it's about equal where the price was at on Friday. But a lot to unpack there, of course.

- Oh, certainly a lot. I'm wondering if there's any other meme stock movement. Obviously what's happening with AMC, with the APE shares is not at all something that other types of meme stocks are thinking about today as well. But GameStop, Bed Bath & Beyond is still very much a story.

INES FERRE: Bed Bath & Beyond, yeah. And so if we take a look at the charts there, you can see that Bed Bath & Beyond is down. And you have to kind of think to yourself, is this meme mania a little bit fizzling? There's a lot of volatility in it right now. And part of this, of course, has to do with Bed Bath & Beyond. Ryan Cohen is still selling his shares and the drop that we've seen there.

But now back to fundamentals, back to the basics of a company like Bed Bath & Beyond. We saw reports that the vendors are halting shipments to the company because they're not getting paid. Wedbush Securities talking about Bed Bath & Beyond risking bankruptcy. So it's now back to the fundamentals when you're looking at these stocks.

Now, I do want to mention though, if we look at fidelity orders by retail traders, guess which ones are the top tickers that retail traders are buying right now? APE, AMC, Bed Bath & Beyond, More buys than sells.

- No more Tesla. And all right, interesting to see. Well, we'll have to see if the fundamentals continue to support these stories over here. We'll continue to watch that. Yahoo Finance's Ines Ferre. Thanks so much.