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Today in the Market (9/6/2023)

Good Evening! On Wednesday, there was a continuation of declines in stock prices in the U.S. This downward trend was driven by persistent concerns over inflation.

The S&P 500 finished the day down by 0.70%, while the Dow Jones saw a decline of 0.57%. Lastly, the Nasdaq Composite fell by 1.06%

AMC IS AT IT AGAIN

AMC Entertainment Holdings Inc. (AMC) intends to initiate a share sale within a short window of fewer than three weeks prior to obtaining court permissions. These approvals have provided the movie theater operator with the opportunity to generate funds for the purpose of reducing its debt obligations.

So how much is AMC trying to sell? The firm announced its intention to offer up to 40 million shares of its common stock for sale. This decision is in line with the equity distribution agreement, which grants the company the ability to sell around 390 million additional common stock. This happened only one month after AMC underwent a significant restructuring process when it converted its preferred shares into common stock and executed a reverse stock split at a ratio of 10-to-1.

How does this benefit AMC? According to the filing, the funds generated from the transaction would be used towards enhancing liquidity, refinancing existing debts, and repaying outstanding liabilities. According to Bloomberg, AMC has a total of $9.5 billion in debt and lease obligations. However, it is anticipated that the financing would result in further dilution of shareholders. And the market was not happy… The company’s shares saw a significant decline of 36.58% and reached an all-time low of $8.62 at the end of trading.

AIRBNB COULD BE IN TROUBLE

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Yesterday, a recently implemented law in New York City came into operation, potentially leading to the removal of a significant number (38,500) of Airbnb listings in the city. This development may serve as a model for urban areas seeking to impose restrictions on property availability

What is this new law and how serious is it? The new law strengthens the enforcement measures associated with an established regulation, which permits house rentals for a duration of less than 30 days only if the host is physically present on the property. The new addition mandates that hosts must complete a registration process with the city. If this does not happen then platforms like Airbnb, Vrbo, and Booking.com could be subjected to penalties of up to $1,500 per transaction. The hosts face the potential imposition of penalties up to $5,000.

So far… According to the Office of Special Enforcement in New York City, as of August 28, a total of 3,250 hosts had completed the necessary forms to register with the city. However, the approval process has so far resulted in just 257 sites being granted official approval.

Where would this lead? it is worth noting that a mere 1% of Airbnb’s income in 2022 was derived from rentals in New York City. However, the firm expresses concern over the possibility of other cities using strict regulations to limit Airbnb’s operations. Cities such as San Francisco and Berlin, along with other major tourist destinations, have already implemented more lenient regulations.

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