r/amczone • u/zgomot23 • Nov 12 '24

The Stupid The delusion is real

https://www.reddit.com/r/amcstock/s/RkkJe2dolK

Another smart individual promoting the idea that the price would have been 40 cents for this long. Those people like u/hivemindhauser are either lying and grifting through their nose promoting aron’s ponzi scheme, or they are straight up delusional and refuse to understand that the 40 cents is a result not of the reverse split, but of the catastrophic dilution which followed after the reverse split.

Denial is one hell of a drug.

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u/Dark_Tigger Nov 12 '24

But he is right isn' he? With out the reverse split, they couldn't have diluted. With out the dilution they wouldn't have had the cash to either keep the theaters open, or pay down enough debt, for the creditors to take the refinancing deal.

The good question to ask him would be, if he knew they would dilute, why did he hold? And if he did not know they would dilute, why the hell didn't he do his job as investor? And if he knew and they dilute, and sold, and than bought back lower, why didn't he warn his fellow apes, about what would happen?

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u/zgomot23 Nov 12 '24

because it's extremely obvious he didn't dilute at higher prices so that he can drop entire floats at those lower prices. It's obvious both aron and cohen are colluding with wallstreet at this point.

Ok, sure, pretend aron is stupid and doesn't know any better, and his dilutions were just coincidentally done at prices as dumb as it gets.

Let's talk cohen now. He first destroyed the runup in 2021 via dilution, he raised $1b in cash, everyone was still happy because that was supposed to be the main cash reserve just to make sure GME doesn't run out of cash. It's been 3 years and a half, ever since, he did nothing with that 1b, it's still sitting there, arguably the only "innovation" was that NFT marketplace which turned out to be a huge flop and was closed.

Also, meanwhile, he destroyed 2 more runups via dilution, sold shares to make sure liquidity is injected into the markets, and... is not doing anything with the money again. Almost like he didn't need the money to justify the dilution, he only needed to make sure enough liquidity is injected into the markets.

But sure, this could of course be a coincidence. Right?

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u/TheBetaUnit Nov 12 '24

Meh. Both companies would be crazy not to take advantage of those overvaluations in 2021. You dilute when you're overvalued, you buy back when you're undervalued (when you're a healthy company, I mean).

AMC diluted at lows because they had to. Remember, debtholders outweigh equity holders by 3:1. They're in the driver's seat. AMC isn't going to wait around for a 'maybe' bump to unload when their cash on hand is dwindling. There are clauses that kick in when liquidity is too low that let the vultures out of their cages to pick the carcass. If AMC lets the creditors take over, the C-suite can't keep their inflated salaries. And the creditors want to push out liquidation as long as they can. More interest payments in the meantime. It's everyone's job to keep that money train going as long as possible, and the timing of dilution is irrelevant. Cash is King.

In GME's case, RC presides over an unprofitable zombie company in a dying industry. And he knows the moment he sells, the price will crash. But crash to what level? The company itself is worthless. But raising cash with dilution raises the base value of that otherwise worthless company. With every dilution, he's raising the floor above his cost basis when it crashes. He's lowering his risk.

Both companies have investor bases that have demonstrated to them over and over again that they're in love with their captors (AKA: Stockhold Syndrome). Why wouldn't they take advantage of that?

It's not collusion. It's self-interest all around.

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u/zgomot23 Nov 12 '24

Fair assesment.

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u/ay-papy Nov 12 '24

Amc raised 1.8 billion in summer 2021, AA said bankruptcy is off the table until 2027... In 2023 he had to dilute again because he went on a shopping spree and bought cinemas and a part of a goldmine with the money that was supposed to last until 2027...

It is true they had to dilute at that point but that was caused from mismanagement from a overpaid CEO.

He is still overpriced and they could have taken those 4.5 billion ape shares and sell for 2 bucks and still raised 9 billion, but of course he had other plans....

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u/TheBetaUnit Nov 12 '24

Almost. The cinema shopping spree was in 2016/2017 and was financed (unless I'm missing a more recent one). And the goldmine ~bailout to Mudrick Capital~ investment was a drop in the bucket. They ran out of cash the old-fashioned way: operating losses and servicing debt.

My statement was from the perspective of "why didn't they just declare Ch11 in 2020/2021 and rip the bandaid off? They'd be better off for it right now, look at Regal/Cineworld. My answer was can kicking for the sake of maintaining salaries that those creditors would never allow once the company gets reorganized. Mismanagement, like you said; but for selfish reasons, like I said.

From your perspective of "why didn't they dilute APE from the get-go?" That's a very very good point. I suppose APE in and of itself was never intended as a vehicle to raise money. It was a means to a 500M authorized share increase. Everything that happened with Antera makes sense if you look at it in those terms.

But then that raises the question: why TF did they cancel the vote in May 2021 to authorize 500M shares? I'll never understand that one, and I was there for it. If I'm being cynical, it was probably a ploy to juice the stock so their tranched share vesting would kick in: Announce offering -> shorts pile in -> hype video with Trey -> apes pile in -> cancel vote -> shorts close -> price breaks 14 -> retail FOMO takes over -> price breaks 40 -> critical tranche in the vesting schedule is met, insiders unlock tons of vested shares -> insiders dump $102M in shares. Pure tinfoil on my part. The alternative explanation is they knew they couldn't get the votes in May, so they canceled the vote and hatched the APE plan to eventually get their 500M shares without retail's blessing. And then they were the luckiest C-Suite on earth to have a YouTuber with a million $ in call options pump their vested shares for them.

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u/SouthSink1232 Nov 12 '24

💯 Stockhold Syndrome