APE does not dilute AMC … at least not at first via /r/wallstreetbets #stocks #wallstreetbets #investing


APE does not dilute AMC … at least not at first

There’s lots of talk about the issuance of APE to immediately dilute AMC stock. This is not how dilution works.

B-b-but more shares price go down means dilute!

This is not what defines dilution, so unless you want to start redefining words, let’s get to what dilution really means. In order to dilute a stock, you need to reduce the % ownership of a holder who does absolutely nothing but hold. If you have 10mil shares of AMC you own roughly 2% of the company. If you bought those 10mil on March 10th, 2021, you owned 11.7% of the entire fucking company. On March 11th, your ownership dropped to 2.2% … Yes, you read that right. In one day, you woke up to seeing your ownership of an entire multi-billion dollar company go from 11.7% to 2.2%! That’s some serious dilution. It would go on to dilute a tiny bit more over the next 5 months, like drop your 2.2% to 2.0%-ish.

Relax, Adam Aron said this good dilution. There’s good dilution and there’s bad dilution. This historically has allowed AA to cash out of ALL of his AMC position that he was legally allowed to sell (retirement is difficult to prepare for, amirite?) AND raise funds for the company, this is good. Don’t worry about your own bags portfolio, that’s not part of what makes dilution good or bad. Let’s focus on the execs company, because without the company, you shareholders are worthless.

Okay, so AA is technically correct, this initial APE ticker going live August 19rd is not dilution. But wait, what’s this about offering more APE? Ahhh, here’s where we get dilution. How many we talkin here, equivalent of dumping selling another 50mil shares?

Wait, what? 4,500,000,000 additional? That’s what an upcoming vote will be about, the real dilution. They cannot dilute this without a vote. The entire reasoning behind APE is to trick shareholders into voting for dilution via APE since diluting via AMC didn’t work (voted NO already).

Position: never bought a single option or share of AMC in my life. 70% of my portfolio is in GME and 20% is in BBBY.

Edit: ew linking AA tweets gave this a god-awful Bruce Lee AA pic…

Submitted August 07, 2022 at 05:20PM by Create_HHNNGG
via reddit https://ift.tt/0m3svt5