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AMC ENTERTAINMENT HOLDINGS AMC June $1 puts
February 24, 2023 - 10:10am EST by
kerrygold
2023 2024
Price: 0.15 EPS 0 0
Shares Out. (in M): 1,447 P/E 0 0
Market Cap (in $M): 5,300 P/FCF 0 0
Net Debt (in $M): 4,100 EBIT 0 0
TEV (in $M): 9,400 TEV/EBIT 0 0

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  • 100 percent Downside Potential
  • Wisdom by Katana
 

Description

Thesis

AMC June $1 strike puts are an attractive, loss-limited, way to bet on the normalization of equity trading dynamics in AMC’s capital structure following the collapse of the company’s dual share class structure.  The opportunity exists because:

I believe there are reasonable scenarios for the puts to be worth 4x their current trading price. At a recent price of 15c, risk 15c to make up to 70c by June 16th, with favorable expected value and skew.

 

 

Situation background

On August 4, 2022, AMC announced a dividend of one APE preferred unit for each AMC share on August 19, 2022. APE was created as an end-run-around AMC reaching the upper limit of its share authorization as AMC shareholders repeatedly voted against increasing the AMC authorization. APE shares hold substantially the same voting and economic rights as AMC shares.