What happened Shares of AMC Entertainment (NYSE: AMC) have fallen by as much as 7% on Wednesday after the beleaguered theater chain provided investors with an update on its plans to raise capital. AMC stock remains popular among retail traders on Reddit's WallStreetBets subreddit, and shares remain elevated from where they started the year. So what AMC was narrowly able to avoid bankruptcy last year as its business was decimated by the COVID-19 pandemic, in part by capitalizing on the surge in retail investor demand. Not only has AMC raised capital by selling shares into the rally, institutional creditors such as Silver Lake converted bonds to stock that it subsequently sold, extinguishing that debt obligation while pocketing handsome profits. Image source: Getty Images. The entertainment company had previously been seeking investor approval to authorize AMC to issue another 500 million shares, which would have resulted in massive dilution to existing shareholders, more than doubling the total number of shares outstanding. That it's withdrawing that proposal is certainly good news, but AMC still plans to raise cash by selling stock that will end up diluting investors, just to a lesser extent than initially proposed. Now what AMC has filed to conduct an "at-the-market" (ATM) equity offering to issue and sell 43 million shares. With an ATM program, companies quietly sell stock into the open market at prevailing prices, and the amount of proceeds that are ultimately raised depend on what prices the shares are sold for. There are currently approximately 450.3 million shares outstanding, so 43 million additional shares would represent roughly 9.5% dilution. "We have previously pointed out that the sale of up to 43 million AMC shares, the currently available amount for possible issuance under a previous shareholder authorization, should more than satisfy AMC's liquidity needs for 2021," CEO Adam Aron commented in a release. "This assumes an expected recovery in the patronage of movie theatres in the second half of this year." 10 stocks we like better than AMC Entertainment HoldingsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and AMC Entertainment Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of February 24, 2021 Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source