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AMC Stock: Insider Selling Did Not Shake Apes’ Confidence

AMC stock is trading 6% higher since early November, despite post-earnings softness and insider selling. Here is what to know about AMC’s latest moves.

AMC stock  (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report has been trading higher in November, having risen 6% since the end of October. Despite seeing popularity drop on the main Reddit forums in the past weeks, shares of the movie theater operator have amassed gains of over 190% in the past six months and nearly 2,000% year-to-date.

Figure 1: AMC stock chart monthly view.

Figure 1: AMC stock chart monthly view.

On November 8, the company reported third quarter earnings, and the market has not reacted very well since: AMC stock has been down 8%. Below, we look at what could be driving the modest decline, and what to expect going forward.

(Read more from Wall Street Memes: GameStop Stock: Major Catalysts In Sight Again)

Insider selling

Insider selling of AMC stock reached a peak of 23 transactions in October, while 9 buy transactions were reported to the SEC. In the past three months, corporate insiders sold $716,000 worth of shares, and $70 million in total has been sold in 2021 so far.

Figure 2: AMC insider transactions.

Figure 2: AMC insider transactions.

The most notorious insider seller has been Adam Aron. AMC’s CEO has filed to dispose of 1.25 million shares of AMC on November 9, which will effectively leave him with a bit over 400,000 shares left plus millions more issuable in the future. Then, half of the intended sale was promptly executed at a price of $40.53 per share.

Of course, it is hard to tell whether the CEO’s transaction had any direct impact of AMC stock price in the past few weeks. Considering that nearly 63 million shares trade hands every day, Mr. Aron’s initial transactions represented only around 1% of the average daily volume.

As a reminder, the CEO selling part of his shares is not necessarily a sign of loss of confidence in AMC. Rather, it is part of Mr. Aron’s plan to unwind his stock positions as he moves into retirement age. According to the CEO:

"I don't want any of you ever to think that I have anything but full confidence in AMC's future."

Apes own the largest chunk

The majority of the 513 million float of AMC shares is owned by individual investors, according to Yahoo Finance. Of the total, about 74% is owned by the public, 25% by institutions and 0.3% by insiders.

Among institutions, Vanguard and Blackrock are the top holders, with 8% and 6% of the shares, respectively. Naturally, these firms turn their holdings into shares of ETF, which in turn can (and usually do) end up owned by more individual investors.

This may explain why insider selling may not be a major stock mover for AMC, especially now. But still, the market reacted negatively shortly after CEO Adam Aron’s earnings call discussion about the sale of some of his personal AMC shares in the fourth quarter, which had already been previewed three months earlier.

What’s next for AMC?

AMC stock has lost steam on the discussion boards as the stock struggles to reach the $50 levels and lacks major catalysts. The recent rise of speculative assets like crypto, metaverse and EV stocks, for instance, may have also shifted the focus of retail investors.

Figure 3: Trending stocks on Reddit on November 23.

Figure 3: Trending stocks on Reddit on November 23.

Yet, there is little indication that AMC will lose its status as “meme stock bluechip”. Another leg higher in AMC is still possible for as long as “apes” remain holding shares in anticipation of the MOASS, or “mother of all short squeezes”.

Twitter speaks

Despite losing popularity on the main Reddit forums and insider selling in October, AMC stock is still up nearly 12% since the past month. What is your stance on AMC now?

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)