Are you tempted to buy AMC’s new APEs? Be prepared to lose everything, the company warns

AMC preferred equity units rose 5% Monday while the company's common stock fell after the company unveiled plans to sell another up to 450 million APEs.

The company intends to use the net proceeds, if any, from the sale of AMC Preferred Equity Units APE, +2.93% to repay, refinance, or redeem the company's existing indebtedness.

AMC AMC, -11.67 issued the first APEs in August as a special dividend using the name created by the investors who turned the company into a meme stock.

The lessons of the meme stocks frenzy were applied to the NFTs.

Half of the stock split was listed under AMC and the other half under A PE. Each of the company's 517 million shares was issued an A PE.

AMC acknowledged in the filing that the A PEs have been volatile since their trading debut. It has ranged between a low of $3.35 and a high of $10.50. The price was $3.75 in midday trading.

AMC has fallen more than 50% in the year to date and is down more than 70% in the last year. It has fallen in value in the past week and a half and in the past month. The S&P 500 has lost more than 20% in the year to date.

The stock has gone from being a victim of the Pandemic to a meme stock darling. According to data from RapidRatings, a company that assesses the finances of public and private companies, the company's financial health is a cause for concern.

AMC has been a meme-stock darling but weakness in some key areas has the company on shaky ground.

The documents for the new APEs show that.

The prospectus states that the market prices and trading volume of our shares of Class A common stock and AMC Preferred Equity Units have been and may continue to be subject to wide fluctuations.

We don't know how long these dynamics will last, and we believe that the volatility and our current market prices reflect market and trading dynamics not necessarily related to our underlying business.

There is a lack of profitability over meme stock darlings.

There is a risk of further dilution as AMC stock has seen significant dilution each time the company has issued a new share.

That's not the only thing.

It is possible that a sudden increase in demand for shares of our Class A common stock that largely exceeds supply and/or focused investor trading in anticipation of a potential short squeeze will lead to extreme price volatility in shares.