Aron, the 66-year-old chief executive officer of AMC Entertainment, has embraced the company’s status as a meme stock in recent months during earnings calls, on Twitter and YouTube, in press releases, and even in monetary donations. He’s even offered free popcorn.
The more than 3 million retail traders holding shares of the company have helped drive AMC’s stock price up about 2,300% this year.
The individual investors, mobilized on Reddit investing threads and Twitter, call each other “apes,” and to them, Aron is “Silverback” – a gorilla pack leader. “All hail the silverback,” one Redditor said in a Friday post.
The Harvard Business School graduate has bucked the trend of other CEOs who have remained virtually silent on their company’s status as a retail-trader favorite and instead reached out to the horde of fans of AMC stock.
On the May 6 earnings call, Aron called them “an army of passionate, interested individual shareholders.”
“They own AMC. We work for them. I work for them. So, by definition, their interests and passions are important to AMC. Their interests and passions are important to me,” he said, according to a transcript from Seeking Alpha.
The millions of traders make up about 80% of the company’s shareholder base.
“Why would you not recognize them? Why would you not embrace them?” Steve Sosnick, chief strategist at Interactive Brokers told Insider. “Management is supposed to be working on behalf of the shareholders, and those are your holders.”
Aron may be signaling a new era of communicating with individual shareholders, said David Jones, Chief Market Strategist at European investment trading platform, Capital.com. AMC and Aron did not respond to Insider’s request for comment for this article.
“We are used to CEOs speaking at stuffy shareholder meetings, and only showing interest in their large institutional investors,” Jones said. “With Mr. Aron taking part in, for example the Youtube discussion on Thursday, he really is opening up to a whole new area of investors that perhaps in the past companies may have appeared to be somewhat dismissive of.”
On the earnings call, Aron said the company’s communication would change in light of its new investor base.
“You’re going to see a lot more outreach to literally millions of investors in our company,” he said. “And it’s going to be quite public. I’ve started tweeting again.”
His Twitter account had been relatively dormant since his time running the Philadelphia 76ers, but now he often tweets multiple times a day.
“I have started to follow Apes, about 500 so far, to get a first hand sense of what our community is thinking snd saying,” he tweeted on May 15.
On June 3, the CEO reached out to his shareholders in a YouTube video with Trey’s Trades, a popular retail investing channel with nearly 300,000 subscribers. He referenced the investing “apes” as he made an argument for the company’s hope to sell 25 million more shares.
The “ape” references don’t stop there. Aron announced on an earnings call that he would donate $50,000 of his money and $50,000 of AMC Cares money to the Dian Fossey Gorilla Fund, which helps endangered gorillas in Africa, as noted in the 1988 film “Gorillas in the Mist” – which he dubbed “extraordinary and heartwarming.”
“The passions of our shareholders become our passions, too,” he said on the call.
On June 2, AMC announced a new initiative called AMC Investor Connect, in which company shareholders can get perks, like free popcorn, and direct communications with Aron.
Playing with fire
All of the outreach to retail traders could be a multi-faceted endeavor, market analysts told Insider.
The company has a heavy debt load and has flirted with bankruptcy in the past. The COVID-19 pandemic presented another set of hurdles as movie theaters shuttered and more entertainment options became available for streaming.
“I certainly tip my hat to the CEO who was in a tough desperate situation and has made the most of it to keep his business alive and maybe even one day thrive,” said Richard Smith, an investing and market cycles expert.
As shares rallied to all-time highs this week, the company issued more stock. Thursday alone, the company sold 11.6 million shares for $587 million after a $230 million sale of $8.5 million shares to hedge fund Mudrick Capital, which the hedge fund later sold for a profit.
“If the market says that your stock is worth X and you have an opportunity to sell some of it at prices that really allow you to shore up your balance sheet in a very inexpensive way, I think you’d be imprudent if you didn’t do that,” Sosnick said.
“The AMC CEO is catering to the crowd because he knows they’re making shares more valuable. He’s happy to cater to the retail investors if they push up the share price,” said Lars-Alexander Kuehn, associate professor of finance at Carnegie Mellon University’s Tepper School of Business.
Smith, the CEO of The Foundation for the Study of Cycles, said Aron also sees the shareholders as movie-theater patrons.
“He needs those people to support his business,” he said. “It’s incredible PR for a business that desperately needs people to get up and go to the movies.”
But Smith said, Aron is “playing with fire,” as the focus has shifted to share price instead of future earnings.
“I think he’s certainly encouraging the idea that we will all be buying and selling things with memes by embracing it as unapologetically as he has, and I think that could definitely come back to bite him in a big way.
But hey what’s the difference between him and Elon Musk? Tesla would not be where it’s at today if it wasn’t for Musk’s memes.”
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