Cinema chain AMC Entertainment announced on Thursday it would sell 11.5 million new shares in a rollercoaster ride that sent the stock soaring. The company also warned investors that they could lose their money, but reversed course after the share sale became public.
The company has caught the eye of so-called “Reddit traders” in recent weeks, who have driven up the shares this week. WallstreetBet, which now has more than 4.5 million followers, was responsible for the break-in – similar to the one during the infamous GameStop rally earlier this year. Other so-called meme stocks, including Express, BlackBerry and others, have also pushed up their prices.
The subreddit exploded as the video game retailer’s shares soared more than 400% this week. The action appears to have helped fuel a so-called short squeeze, in which investors used options to bet against a stock that needs to be covered to buy back shares.
The WallStreetBets Reddit community, which turned the stock market upside down this week with the GameStop campaign, has been around since 2012, but it has exploded in recent months after it was made private. According to a Wall Street Journal report, the subreddit remained relatively small until 2020, when the popularity of stock trading platforms soared. Since then, it has seen a significant increase in attention after interest in Gamestop stock recently surged, driven in part by traders on the forum.
The underidentity has since become a more prominent position on the WallStreetBets subreddit, with more than 2.5 million members.
Other struggling companies, led by retailer GameStop, have been wiped out, with several online brokers halting trading. But AMC Entertainment, a company that appears to be in decline, has seen its value soar in the past week.
Several press reports say the company is considering a share sale to use the stock’s momentum in its favor. As the financial system looks for a remedy, AMC is weighing its options after investors filed a class action lawsuit against online company Robinhood for blocking trade.
Silver Lake, a private equity firm that has been one of AMC Entertainment’s biggest shareholders in recent years, has sold its stake in the company pending a share sale of its own. The theater chain got something – needed relief – with Wednesday’s stock surge after it managed to stave off bankruptcy 100 years after the Covid 19 disaster.
In an SEC filing after the close of trading, AMC said Silver Lake sold shares at $13 a share, where they had been traded just three days earlier. AMC Entertainment (NYSE: AMC) Cinema Operator GameStop Inc. (NASDAQ: GME), the most popular Reddit game, and its popular sidekick, is one of the world’s largest video game retailers, Gamestop Inc., with more than 1,000 stores in the U.S., Canada and the United Kingdom. But AMC shares, which have seen a massive influx of retail investment since the game’s end, soared nearly 300% in a matter of days, ending today’s session at 1: 19 p.m., according to Thomson Reuters.
One analyst said AMC carries a high risk and could face a bumpy ride. Last weekend, AMC’s shares were more than 30% below their all-time high of $20.00 on August 1.
Stock analyst Rich Greenfield, who covers media and technology companies for LightShed Partners, started reporting on AMC Entertainment two weeks ago with a sell rating. At the moment, the company has tied a short-term fix to its $1.5 billion worth of outstanding shares, but it is not known how many shares it has outstanding for the company because it does not have information on its balance sheet. AMC Networks shares have also been on the move recently, rising 15% over the past 12 months, according to S & P Global Market Intelligence data.
Data presented at the New York Stock Exchange’s annual meeting on Monday, March 20, 2016 in New Orleans.
Executives have a good chance of positioning the company’s resources to take advantage of market volatility in April, according to a new report by Morgan Stanley analysts.
AM, which operates the world’s largest cinema chain, issued $8.5 million worth of shares to hedge fund Mudrick Capital Management on Tuesday. AMC announced Tuesday that it will issue $7.7 million of its common stock to achieve a big jump in the share price by 2021. It shows how Wall Street is preparing to quickly put an end to the trading frenzy that has helped fuel a surge in several stocks favored by retail investors.
Mudrick sold his AMC stake for a $25 million profit because he believed the company’s shares were overvalued, a source familiar with the matter said Tuesday. Last week, investors bet that the stock was undervalued enough to push it to $30 a share.
Stock trading platform Robinhood has eased restrictions on buying shares in GameStop and other companies involved in the recent memes – stock frenzy. The trading limit for gameStop shares has been raised from $20 to $100, while trading restrictions on other major video game companies such as Nintendo have also been relaxed, according to the Wall Street Journal. Robinhood also lifted a $10,000 cap on the purchase and sale of Gamestop shares and eased trading restrictions on the company’s shares on other platforms.
