AMC kicked off the trading session on May 14th with an astonishing leap of over 210%. Yes, you read that correctly. The frenzy surrounding meme stocks has struck once again.
- Meme stock frenzy reemerges with GameStop and AMC seeing significant surges in trading activity, ignited by a single post on social media platforms like Twitter.
- AMC shareholders receive positive news as the company concludes its equity offering, raising approximately $250 million and marking a total equity raise of around $3.14 billion since 2020.
- With meme stocks rallying and short sellers panicking, predicting the future trajectory of AMC’s stock price remains uncertain, although improved fundamentals and recent capital raises suggest potential for further gains.
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Source: Donreal Lunkin
The Great News: Meme Stock Rally Returns
Meme stocks are back in the spotlight with a resurgence in trading activity.
A single post on X/Twitter sparked a surge in trading for meme stock favorites GameStop and AMC during the May 13th session.
The post came from Keith Gill, the central figure of the GameStop stock saga, also known as “Roaring Kitty” on YouTube and “DeepF**kingValue” on Reddit. Later that day, Gill posted several other mysterious videos, signaling his return to social media.
— Roaring Kitty (@TheRoaringKitty) May 14, 2024
Gill played a pivotal role in the movement initiated by retail investors around distressed companies like GameStop in 2020, leading to significant short squeezes on numerous stocks throughout 2021, notably involving GameStop and AMC Entertainment.
Following legal scrutiny surrounding the GameStop rally and other meme stocks, Gill kept a low profile, with unknown whereabouts and minimal activity on his social media accounts.
However, on May 9th, Gill, under his “Roaring Kitty” persona, liked a post from the Taste of Cinema profile @davidcinema dated February 14th on his X account. This action sparked thousands of theories among AMC and other retail investors, speculating that Gill hinted at something related to the prominent AMC meme stock.
What is the best movie you've ever seen that takes place in real time? pic.twitter.com/LQbZvdvtQF
— Taste of Cinema (@davidcinema) February 14, 2024
Since May 10th, AMC shares have surged by 117%, and by pre-market on May 14th, they were already up more than 113%. GameStop stock soared by 75% in the trading session on May 13th, and by pre-market on May 14th, it showed signs of jumping another 114%.
The Second Piece of Good News for AMC Shareholders
AMC shareholders received another boost as the company announced the conclusion of its dilution process. On Monday, May 13th, the movie theater chain revealed the completion of its previously disclosed “at-the-market” equity offering, which commenced on March 28th. Through this offering, AMC raised approximately $250 million in new equity capital by selling 72.5 million shares, before commissions and fees, at an average price of about $3.45 per share.
In recent years, AMC has been battling for survival, particularly since the pandemic severely impacted its business operations, leading to liquidity challenges in the face of substantial debt obligations. To address these financial pressures, AMC has resorted to raising capital through equity issuances, capitalizing on the heightened interest in its stock in the market, primarily from retail investors.
With this latest injection of cash from the concluded “at-the-market” equity offering, AMC has now raised a total of around $3.14 billion in equity since 2020. Notably, a significant portion of this capital has been contributed by retail investors, who constitute the company’s largest shareholder base. This fundraising effort possibly marks one of the most substantial capital-raising endeavors by retail investors for a publicly traded company in history.
What Lies Ahead Now?
The sky’s not even the limit anymore. With AMC shareholders jubilant, meme stocks soaring, and short sellers in a frenzy, predicting how far AMC stock can climb is a daunting task.
From a fundamental standpoint, the company has consistently demonstrated improvement in its business operations each quarter, successfully raising capital and renegotiating its debts. The primary obstacle to the stock’s performance had been dilution, but now that shareholders have set aside this concern, it’s highly probable that the company’s share price will rebound even more vigorously with the renewed bullish momentum of meme stocks sweeping Wall Street once again.
Perhaps CEO Adam Aron pulled the dilution trigger too hastily by selling the 72.5 million shares at $3.45. If he had waited just one more day, he could have potentially sold at $9, or even higher, eliminating any worries about liquidity for AMC.
Nevertheless, it seems that meme stock rallies continue to rescue AMC from a grim fate for its business, making the stock an attractive haven for traders aiming to capitalize on short sellers and reap substantial profits.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content)
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