AMC Entertainment Holdings profited handsomely from its Reddit rally. AMC Entertainment Holdings’ stock shot up on Thursday after the company announced a $428 million stock sale.
On Thursday, AMC Entertainment stock (ticker: AMC) rose nearly 24% to $12.77, after management announced the completion of a 43 million share at-the-market equity offering, which began on April 29 and raised $428 million before commissions and fees. That translates to an average selling price of about $9.95 per share, which is significantly higher than the stock’s 52-week low of $1.91.
“Bringing in an additional $428 million of new equity capital will immediately buttress and fortify our liquidity profile,” CEO Adam Aron said in a news release. “The additional cash raised puts AMC in a stronger position to tackle the challenges and capitalize on the opportunities that lie ahead.”
Users on Reddit’s WallStreetBets forum favoured AMC Entertainment, which made headlines in January for their bets on heavily shorted companies, especially GameStop (GME). During an earnings call earlier this month, Aron mentioned the crew.
“Just go on Twitter, just go on Reddit, just go on YouTube, read what these people write,” Aron said. “They love AMC. And these are not people who are just going to be investors in AMC. These are going to be customers of AMC who come to our theaters and enjoy watching movies at our theaters as paying guests.”
With theatres closing and audiences moving to streaming services, those on Wall Street wondered whether AMC would survive the pandemic. However, the organisation was able to collect funds at a crucial moment. AMC’s attempts to raise capital have given it a chance to profit from the relaxation of pandemic-related constraints, but it isn’t out of the woods yet.
Users on the WallStreetBets forum reacted to the stock’s rise with their usual all-caps, expletive-laced fervour, which included a slew of rocket ship emojis. One consumer, who used a profane name, wrote, “Bagholding since Jan 29, just went green.” “Exactly the same. 30 for $13.88 “I just want out,” a user named stinkypickles answered.
Months ago, a few major players cashed in. After AMC stock rose in the wake of GameStop’s run earlier this year, private equity company Silver Lake turned $600 million in AMC debt into stock. The company then sold the share for $713 million.