AMC could have cashed in more on its meme stock status
The movie theater chain’s stock has risen from $3 to above $13.
One of the most interesting things to watch during meme stock manias is when frenzied buying activity morphs from a video game on a screen completely untethered from reality into something that actually has a real-world impact.
Hertz is probably the best example of this. The company filed for Chapter 11 bankruptcy in May 2020, but the sheer power of retail buying was able provide a lifeline for the company to come out the other side.
This is an example of legendary investor George Soros’s general theory of reflexivity, where market participants’ buying and selling decisions based on their perceptions — even if flawed — are able to shape and define reality.
Along these lines, it seems like movie theater chain AMC Entertainment just missed out on the ability to secure some even-cheaper funding after its stock surged from just below $3 at the end of this week to above $13 in pre-market trading on Tuesday.
This morning, AMC published a Form 8-K showing that it had completed an “at-the market” equity offering launched on March 28, 2024 on May 13. Translation: it was raising money by selling 72.5 million new shares of the company into the market. The average price it sold shares at was $3.45.
Since the start of the week through 8:30am ET, the volume-weighted average price for shares of AMC has been $5.38.
Granted, from the time this offering was launched on March 28 until the start of this week, the volume-weighed average price was just $3.13.
So management was still able to benefit a little bit from the nascent return of meme stock mania, but certainly not as much as it could have.
Especially considering (again, as of 8:30 am ET), AMC shares have nearly the same volume in the past barely-over-one-trading day than the previous 31 trading days combined!
