An AMC theater is pictured in Times Square in the Manhattan neighborhood of New York City, New York on June 2, 2021.
Carlo Allegri | Reuters
AMC Entertainment rode the wave of “meme stocks” trading Wednesday and hit record highs.
The stock closed at an all-time high of $ 62.55 per share, almost double Tuesday’s closing price. The previous closing record was $ 35.86, which was set on March 23, 2015, according to FactSet data.
At one point, AMC stock rose as high as $ 72.62, well above its previous intraday high of $ 36.72 that occurred on Friday.
With retailers gathering around AMC, the cinema chain has returned the favor.
AMC executives have welcomed the new investors who have brought the company massive profits over the past few months. On Wednesday, the company made a special effort to communicate with this new base by offering free popcorn and the promise of exclusive screenings for those who held its shares.
The manic activity comes despite a report that a hedge fund has sold its stake in the cinema 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 from the sale and said it could use the funds to make acquisitions, modernize its theaters and tear down its balance sheet.
The hedge fund later turned around and sold all of its AMC shares for a profit, according to Bloomberg News.
Typically, such a sale would result in a sell-off as the newly issued shares dilute the value of the existing shares. Instead, the stock climbed higher.
Trading was robust on Wednesday. The stock stopped several times as it hit new highs. At the end of the day, more than 710 million shares were exchanged, almost double the outstanding shares of AMC. The company’s average 30-day volume is 143 million shares.
Shares of other heavily shorted stocks like Bed Bath & Beyond, GameStop and Blackberry also got into the buying frenzy. Bed Bath & Beyond stocks were particularly active, closing at $ 44.19, up 62%. That was the highest closing price since January 27th.
Last week, Bank of America said the chatter was picking up in these stocks. Since then, trading has been more active.
The surge in AMC stock has resulted in CEO Adam Aron growing his own net worth more than $ 200 million since the start of the year. It was a staggering turnaround for the company when its business was effectively shut down during the pandemic. The cinemas in most parts of the country were closed for months. With no money coming in from ticket sales and concessions, AMC fell behind with its rent. On the verge of bankruptcy, short sellers raved about the stock.
Retail investors inspired by Reddit chats have used their growing numbers to fight back. According to data from S3 Partners, investors who sold the stock short lost an estimated $ 1.23 billion over the past week as the stock rose more than 116%. The stock is up more than 2,850% since the start of the year.