An AMC theater is shown in Times Square in the Manhattan borough of New York City, New York, June 2, 2021.
Carlo Allegri | Reuters
AMC Entertainment rode the wave of “meme stock” trading on Wednesday, hitting all-time highs.
The stock closed at an all-time high of $ 62.55 a share, nearly double the closing price on Tuesday. Its previous closing record had been $ 35.86, which was set on March 23, 2015, according to FactSet data.
At one point, AMC shares soared to $ 72.62, well above its previous intraday high of $ 36.72, which came on Friday.
As retailers have rallied around AMC, the theater chain has returned the favor.
AMC executives have embraced their new investors, who have driven massive profits for the company in recent months. On Wednesday, the company made a special effort to reach out to this new base, offering free popcorn and the promise of exclusive movie screenings to those who owned its shares.
The manic activity comes despite a report that a hedge fund had sold its stake in the movie theater company. On Tuesday, AMC reported that it had sold 8.5 million newly issued shares to Mudrick Capital, the latest in a series of capital increases for the company, a favorite of Reddit traders. The company raised $ 230.5 million through the sale and said it could use the funds to make acquisitions, modernize its rooms and deleverage its balance sheet.
The hedge fund then turned around and sold all of its AMC shares for a profit, according to Bloomberg News.
Typically, such a sale would trigger a liquidation because the newly issued shares dilute the value of the existing shares. Instead, the stock was higher.
On Wednesday, the negotiation was solid. The action paused multiple times as it soared to new heights. At the end of the day, more than 710 million shares were exchanged, almost double the number of AMC shares outstanding. The company’s 30-day average volume is 143 million shares.
Shares of other heavily shorted stocks such as Bed Bath & Beyond, GameStop and Blackberry were also caught in the buying frenzy. Bed Bath & Beyond shares were particularly active, closing at $ 44.19, an increase of 62%. That was its highest close since Jan.27.
Last week, Bank of America said the conversation was picking up again on these stocks. Since then, the trade has been more active.
The surge in AMC shares has caused CEO Adam Aron to see his own wealth skyrocket by more than $ 200 million since the beginning of the year. It has been an impressive turnaround for the company, which saw its business effectively come to a halt during the pandemic. Cinemas were closed in most parts of the country for months. With no money coming from ticket sales and concessions, AMC fell behind on its rent. On the brink of bankruptcy, short sellers invaded stocks.
Retail investors inspired by Reddit chats have used their growing numbers to fight back. Last week, investors shorting the shares were estimated to have lost $ 1.23 billion as the shares rose more than 116%, according to data from S3 Partners. The stock is up more than 2,850% so far this year.