On Thursday night, CEO Adam Aron asked shareholders to allow the company to issue up to 25 million more shares. If they back the plan, the company wouldn’t be able to sell the additional AMC stock until 2022.
“The shareholders should authorize more shares, because this could be a very valuable tool to build this company going forward and grow this company going forward,” he said on the Trey’s Trades YouTube webcast.
He noted that prior stock sales provided the company with enough capital to avoid bankruptcy and now allow it to buy more theaters.
This came after AMC raised $230.5 million from a stock sale to Mudrick Capital and an additional $587.4 million from a secondary share offering. For all of Q2, AMC’s tally thus far is $1.246 billion. Proceeds will go in part to acquiring new theater leases and paying down debt, AMC said.
The world’s largest movie theater company moved this week to engage directly with its army of retail investors via a new Investor Connect platform, courting them as a resource beyond the Reddit-fueled frenzy.
Over the past few months, AMC saw its retail investor base swell to more than 3.2 million, and they owned more than 80% of the company as of March.
Meanwhile, AMC stock has nearly doubled this week and has soared more than 2,000% so far this year. The surge has helped pushed AMC’s market cap to $23 billion, topping original Reddit stock GameStop‘s (GME) $18 billion.
AMC Stock, Meme Stocks
Shares of AMC Entertainment were down 2.5% at 50.07 on the stock market today, continuing to bob up and down. AMC stock topped a 14.64 buy point May 18 and was quickly extended, meaning shares are not in buy range. GameStop stock fell 2%.
Speculation on online stock messaging boards like Reddit fanned this year’s gains in meme stocks. In this so-called Reddit rally, enthusiastic retail investors took on “short” shareholders betting against the stocks. The short sellers were forced to buy shares to stop losing money, adding fuel to the surge.
Despite the surge in AMC stock, the company said in a filing Thursday: “We believe that the recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last.”
AMC further warned against meme-stock hype: “Under the circumstances, we caution you against investing in our class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.”
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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