AMC Shares Surge Amid Pandemic Recovery
AMC Stock Hits New High
AMC Entertainment’s (AMC) shares hit a new all-time high Wednesday because of a number of factors. With strong sales at the box office during the long Memorial Day weekend, investors are betting the movie theater industry and AMC will recover.
Additionally, investors seemed enthusiastic about AMC’s sale of 8.5 million shares to the hedge fund, Mudrick Capital. AMC raised $230.5 million via the stock sale. Proceeds will be used for acquisitions, to pay down debt, and to upgrade cinemas.
AMC Rewards Retail Investors
During the pandemic, AMC was on the brink of bankruptcy as COVID-19 shutdowns halted its operations. During this period, short-sellers bet the company’s stock would plummet. Meanwhile, retail investors inspired by the WallStreetBets Reddit page and other discussions on social media, poured into AMC. These investors purchased shares in droves, sending AMC shares higher. The stock’s value has climbed more than 1,400% in the past five months.
As of March, individual investors own about 80% of AMC’s 450 million outstanding shares. To reward them, AMC created a new portal on its website. There, individual investors get access to special deals and information about the company, as well as perks like free popcorn.
AMC Eyes Expansion
Enthusiasm from retail investors may be emboldening AMC to take on more risks. Instead of using revenue from box office sales to improve finances or reduce its debt load, AMC plans to chase more growth. This bet depends on individual investors sticking with the stock.
In detailing its stock sale to Mudrick Capital, AMC said there are “highly attractive theatre acquisition opportunities” for the company. The commitment to growing through acquisitions, even during a pandemic, is typical of AMC. This kind of business model is how AMC became the country’s largest movie theater chain over the years. It will be interesting to see whether the strategy continues to pay off.