AMC Drops Hammer on Meme-Stock Investors With Mass…
While several investors were excited with their gains from its outrageously bullish stock, AMC Entertainment dropped the hammer on Thursday when it filed to sell more than 11 million shares.
“In accordance with the terms of the Distribution Agreement, we may, through our sales agents, offer and sell from time to time up to an aggregate of 11,550,000 shares of our Class A common stock,” AMC said in an SEC filing.
Shares of AMC, which were previously up more than 20 percent in premarket trading dropped 30% and were briefly halted for volatility after news of the stock sale broke out.
This does not mark the company’s first effort to capitalize on recent volatility. Earlier this week, AMC raised $230 million from Mudrick Capital in an offering the company said: “will allow us to be aggressive in going after the most valuable theatre assets, as well as to make other strategic investments in our business and to pursue deleveraging opportunities.” Those shares were then flipped and sold for a profit as the New York-based investment firm told clients AMC’s stock was overvalued.
The company is warning investors that they could lose their entire investment should they buy its shares. “The market prices and trading volume of our shares of Class A common stock have recently experienced, and may continue to experience, extreme volatility, which could cause purchasers of our Class A common stock to incur substantial losses,” AMC said in its filing.
The filing allows for shares to be sold at the market, which is unlike a traditional stock offering because the buyers are found in the open market where retail traders thrive. Stocks sold in traditional offerings are purchased mostly by institutional investors. B. Riley will handle the transaction.
AMC Entertainment is garnering attention from WallStreetBets traders in recent weeks, pushing the stock up nearly 140 percent this week to an all-time high of $62.55 on Wednesday. AMC is up 512 percent this quarter and a whopping 2,850% this year. The market value has ballooned to above $31 billion.
In parallel to the epic short squeeze of GameStop in January, short-sellers have increased their bets against AMC shares over the last month, possibly fueling the move higher. About 18 percent of the AMC shares available for trading were still sold short through Wednesday, according to S3 Partners.
On Wednesday, the company announced a new shareholder platform that will offer investors perks at actual movie theaters, including free popcorn and direct communications with CEO Adam Aron, who has been dubbed “Silverback.”