Dalian Wanda Group Closes Curtain on Majority AMC Ownership

The Chinese conglomerate has trimmed its stake to under 10% as the short squeeze AMC rally continues.
Anthony RussoMar 15,2021,17:00

Chinese conglomerate Dalian Wanda Group Co. no longer has majority control over AMC Entertainment (NYSE: AMC), as the short-squeeze rally continues.

Back in 2012, Wanda obtained a majority stake in AMC for $2.6 billion but has reduced its holdings several times over the years.

In an annual report filing on Friday, AMC said that Wanda trimmed its stake to 9.8% as of March 3. As of October, Wanda controlled 37.7% of the equity 64.5% of the voting power in the world’s largest movie chain.

The news broke after AMC posted a staggering net loss of $4.6 billion in 2020. In an earnings call last week, AMC chief executive officer Adam Aron said that Wanda had converted its Class B common shares into Class A common shares. While Wanda will still be AMC’s largest shareholder, it will no longer have controlling influence over business decisions. Also, Wanda will maintain two seats on AMC’s board of directors.

"With no controlling shareholder in place, now, AMC will be governed, just as most other publicly traded companies, with a wide array of shareholders," Aron said.

Well, Aron is partially right; not every stock is an attractive short squeeze target currently.

Intraday, AMC’s stock was surging 24% at $13.85 per share. Even though AMC has been reopening more of its locations, the stock likely isn’t gaining much on fundamentals. Instead, a Reddit mob that includes retail investors has been driving up the price of the stock to torment hedge funds.

This could continue as more Americans receive their $1400 checks as part of the $1.9 trillion economic stimulus package that was signed into law by President Joe Biden last week.

But perhaps AMC owes it to the Reddit crowd for potentially saving it from bankruptcy. Since December, AMC has raised more than $1 billion, while eliminating all non-essential spending to stay afloat.

As vaccinations continue rapidly in the U.S., AMC will hope demand picks at its theaters by the summer. But for now, AMC will remain an interesting short squeeze stock.

Shares of AMC have skyrocketed 145% since the middle of February.

Topics:Dalian Wanda, AMC, Reddit.