AMC Entertainment announced that it would accept four different cryptocurrencies for movie tickets or for purchases at its concessions. The decision has investors and moviegoers alike wondering: Why four cryptos?
Adam Aron, the chief executive of AMC Entertainment, tweeted Wednesday evening. He observed that cryptocurrency enthusiasts already “likely know @AMCTheatres has announced we will accept Bitcoin for online ticket and concession payments by year-end 2021.”
He then added, “I can confirm today that when we do so, we also expect that we will similarly accept Ethereum, Litecoin, and Bitcoin Cash.” These plans, he said, will come to fruition by the end of the year.
Sorry, Pup, You Still Aren’t Mainstream
This makes for a collection of the top-tier most “mainstream” forms of payment among the alternative currencies. Interestingly, Dogecoin was not listed by the CEO as one of those that will become acceptable payment.
DOGE is certainly at the top tier in terms of the amount of attention it has received. Also, Sabrina Toppa observed at TheStreet.com that Dogecoin is adopted by some of the same “meme stock” investors who also adopted AMC as one of their equity mascots.
After all, Burger King Brazil recently said it would accept Dogecoin as payment for dog treats. That is a sign that the meme stock fad, and its love for the one-time practical joke currency, is having some impact in the retail world. Why should AMC not include Dogecoin in its list? That question has sparked “some complaints from AMC’s retail investors,” according to Toppa.
The likely answer, of course, is that Dogecoin has a unique risk among the cryptocurrency groups. The other branches of this family tree all have in common a limit on the number of tokens that can be generated, a limit that contains the issue of inflation. Dogecoin is subject to inflation and in principle to worthlessness as a consequence, because any conceivable amount of it may be generated.
Why has AMC made this Move?
Dogecoin aside, why has AMC opened itself to the range of alternative currencies that it has?
The answer may be that AMC is still acclimating itself to the stresses of being a meme stock, as well as the volatility that involves. It may also want to assemble a variety of financial tools to meet the stresses being a meme stock may entail.
This spring AMC planned to formally ask its shareholders for approval to issue 500 million fresh shares. This would in effect have doubled the number of shares in circulation, creating a significant dilution in the value of the shares already there.
It canceled that plan after a lot of negative feedback. It then appeared ready to go ahead with a modified version of it: asking for authority to issue 25 million fresh shares.
As Aron said: “To successfully navigate the road ahead, we seek to assemble all of the financial tools that might help us.” In due course, he backed away from the small-scale version of the plan, too.
Acceptance of the cryptos may be in pursuit of the same goal. He is still facing a volatile world and still looking to assemble financial tools.
Of course, if Aron thought it useful to have, say, Bitcoin Cash on the assets side of the balance sheet, there were other ways he could have gotten it there. He could simply have had the company treasurer exchange dollars for it.
But on one reasonable hypothesis: Aron has made the judgment that (a) it is sensible to have these cryptos on the balance sheet, and (b) it is at least as sensible to receive them, for this purpose, in return for movies and popcorn as it would be to receive them in return for dollars.
What does the market think?
Does the market think he is doing the right thing? The evidence is ambiguous. The morning after Aron’s announcement, the stock price (NYSE: AMC) began to rise, but it didn’t last long. The price went from $46.48 Thursday morning to $48.41 at 1:30 p.m. In the remainder of the afternoon, it gave up those gains.