How Fox Business’ Charlie Gasparino Proved the AMC Ape-Investor Army Wrong

Fox Business reporter Charlie Gasparino, who has been in a heated Twitter war for nearly two years with AMC Entertainment investors, just won a major battle.

The former Wall Street Journal and veteran television journalist has been warning the movie theater chain’s executive suite is leading the company into a disaster. AMC’s latest move — a plan announced Monday to flood the market with 425 million new Preferred Equity Units — only bolsters Gasparino’s argument that common shareholders were about to get walloped.

His opponents are the Apes — retail investor fanboys who keep blindly beating their chests that the company’s stock is “going to the moon.” They typically uses a rocket ship emoji to signal that the stock, which closed at $7.67 on Wednesday, can someday maybe reach its all-time high of $77 in June 2021 at the peak of the meme-stock surge. AMC’s shares and APEs now trade for a combined $11 (oddly, APE closed at $3.37 although each unit represents the exact same stake in the overall company). Even combined, that’s nowhere near the $1,000 that some of the Ape investors were predicting.

And they’ve been attacking Gasparino because he told the truth — shareholders were facing a major dilution in the stock. This is where business, entertainment, Twitter and journalism collide.

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Gasparino is combative (full disclosure: I’ve known him for years as a colleague in financial journalism and he once told me on Twitter I lived in my “mother’s basement.”) And, as a former professional boxer, he knows how to land a punch and also how to take one. He’s a hardscrabble financial journalist with a Wall Street source list full of CEOs, traders and bankers accumulated in a decades-long career at the Journal, CNBC and now Fox.

He warned on the cable news network and to his 154,000 social media followers that AMC boss Adam Aron was misleading investors — raising billions by selling new stock during the pandemic until shareholders earlier this year expressed they didn’t support the company’s plan to issue even more. Gasparino has been sounding the alarm that Aron was going to dilute common shareholders.

AMC then activated pre-existing shareholder approval to issue preferred equity units, known as APEs, and Gasparino again warned more shareholder dilution was ahead. The cinema chain disclosed in filings with the Securities and Exchange Commission Monday that it could issue 425 million APEs and use proceeds to repay some its massive $5.5 billion in debt or make other investments.

The nation’s No. 1 cinema chain with 636 locations and 8,094 screens even copped to this in its SEC filing: “Extreme fluctuations in the market price” of common stock and APE units “have been accompanied by reports of strong and atypical retail investor interest, including on social media and online forums.” (A rep for AMC did not respond to requests for comment for this story.)

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And you don’t even want to know the frantic posts that whipsawed social media sites like Twitter and Discord when AMC made the eye-rolling decision in March to buy a 22% stake in a mining company for about $28 million. Not a crypto mining company, but the kind that looks for silver and gold. Aron called the investment “a bold diversification move.”

Analysts were baffled right along with investors. Eric Handler, an entertainment analyst with MKM Partners, said the company was “investing valuable capital into a very speculative venture” that is “outside of its core competencies.”

Gasparino declined to comment for this story and referred TheWrap to Fox’s spokesperson. But in a recent column for The New York Post, he summed up how meme stocks — a nod to the proliferation of the funny images, videos and text that’s spread rapidly on the internet — upended the market.

“It also distorted reality. Retail, armed with Reddit message-board ‘research,’ drank the Kool-Aid,” he wrote. “The meme-stock frenzy that began in January 2021 seemed to prove their point. Small investors rallied together to snap up stocks of money-losing companies the hedge funds bet against. They sent shares of troubled businesses such as AMC and GameStop to the moon.”

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It’s not terribly difficult to figure out why AMC is a troubled business. The movie theater chain had gone on an ill-timed acquisition spree before the pandemic, racking up roughly $5 billion in debt at the end of 2019 and posting losses of $149 million — after recording a $110 million profit in 2018.

Then the pandemic decimated moviegoing worldwide — while also ushering in a new reality where streaming is king and cinemas became the last place one wanted to be trapped inside for two hours. Even as theaters have reopened and Hollywood has produced occasional blockbusters, overall ticket sales still lag behind pre-pandemic levels: This September’s box office has sunk to the lowest levels in a quarter century.

But don’t tell that to the Apes — they don’t really mount a clean fight.

They’ve weaponized Twitter, taking potshots at everything from Gasparino’s family members to his well-publicized workout routines to even going on attack when the journalist penned a very heartfelt New York Post column about his prostate cancer diagnosis. They’ve gone after his producer, Eleanor Terrett, when she reported a testy conversation with Aron. He criticized her, unleashing the floodgates for demeaning Twitter memes that bordered on being both sexist and ageist.

There’s even a Change.org petition begging Rupert Murdoch to fire Gasparino from Fox: “Charles Gasparino has proved time and again that he lacks journalistic integrity and basic human decency. He has repeatedly attacked retail investors for their investment choices and pushed his agenda and false narrative that movie theaters, including AMC, are dead — when they have recently posted near-record attendance. Charles Gasparino does not deserve the platform he has been given and his continual abuse of this platform is repulsive and disgraceful.”

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AMC has the opposite of near-record attendance — even Aron said the company’s ticket sales won’t rise to pre-pandemic levels. The petition has only 1,132 signatures. And Gasparino is still doing multiple hits a day out of the Fox Business studio at 1211 Avenue of the Americas in Manhattan.

That’s not to say the Apes haven’t taken some negligible shots. For instance, they went on a public warpath as some past career controversies resurfaced, and piled on when he got into a very public scrap trying to enter a party at Sun Valley’s exclusive media summit.

There are also a number of tweets Gasparino dispatched to defend himself and Fox Business’ reporting — then later deleted. Publicly, about the worst thing Gasparino has leveled against the AMC Apes is that they should get out of their mother’s basement a bit more.

“This whole Ape thing, there are different varieties. Some are grifters and criminals, the YouTube circuit bunch. Some are naive. And some really think things through,” said Marc Cohodes, a former hedge fund manager who’s now an individual investor. “The guys who attack Charlie are the people who shoot the messenger rather than pay attention to the message.”

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Cohodes added that Gasparino is someone who doesn’t “mind a tussle, a fight, because at the end of the day he tries to help people out with his reporting. When those guys want to get nasty with him, he’ll go toe to toe.”

So, what’s more powerful these days? What resonates more? An informed journalist with a microphone on America’s leading business news channel that overtook rival CNBC in ratings last month. Or, thousands of Twitter trolls with an ax to grind (and a portfolio to protect).

What investors didn’t know during the past year is that they were buying a stock where management was going to issue more shares, thereby diluting every share’s value.

Gasparino has never personally gone into attack mode with Aron himself, even calling him a “very able CEO” both on air and in print. His beef is with the Apes. At this point, Charlie has won a battle against the bots and anonymous users who are emboldened by social media’s mass hypnosis of civility and reason.

His last message to the Ape Army on Twitter: “Not diluted ha!”

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