AMC taking back its crown?Meme-stock darling AMC is back in the spotlight, reclaiming its place among TradingView’s top gainers on Tuesday with a jump of nearly 25% on the back of heavy volume.
After a lackluster month, shares of Reddit fan favorite AMC Entertainment saw their biggest jump since the beginning of June, surging 24.5% as high volume in the late session spiked prices. After seeing parabolic gains in May and June, July saw the price fall just under 40% before Tuesday’s jump. AMC stock was the second most mentioned on WallStreetBets over the last 24 hours, up 155% with 374 mentions. Shares ended the day at $43.09 after reaching highs of $44.39, and it was the second most actively traded stock on the U.S. market with trading volume around 166 million shares.
AMC has been relying on its meme stock status to bring in capital as it waits for the entertainment sector to liven up post-COVID, and some of the excitement could be thanks to steps the company has taken to make the most of its re-opening. The entertainment company said after market close on Monday that it would be opening two more theatre locations in the L.A. area, and last week it announced its second consecutive weekend attendance record post-reopening. The news points to the potential recovery of its underlying business, which it needs after investor outrage forced the company to table a recent share sale vote.
As of Monday’s close, around 75.84 million shares of AMC were sold short - about 15% of its float.
AMC's bear run continuesShares of AMC fall 15% from their record high on Wednesday as the meme stock momentum fades, although they regain some ground on Thursday trading.
A bunch of retail fan faves have been in a slump this month, with AMC down 33% for July, Clover Health losing 37%, and GameStop down over 20%. The movie theatre chain fell 15% on Wednesday to close at $33.43, down over 50% from its early June high of $72.62, although it regained some ground with a jump of 7.69% the next day.
The declines come on the back of fears that the day-trader frenzy that took over the market during lockdown might be losing steam – there’s been a decrease of about 30% in retail stock trading, according to Goldman Sachs. While the downturn doesn't take away from the astronomical gains meme stocks have made this year, it does indicate that investors weren’t too impressed with turnaround plans from firms like AMC and GameStop.
said Eric Liu, co-founder and head of research at Vanda Securities.
AMC is still up over 1,500% this year though.
Reality sets in for AMCIs the meme stock madness over? AMC sees some steep losses following its recent rally as investors are less than impressed its share sale announcement, sending stocks down nearly 25% toward the end of the week.
AMC had a few shock announcements for investors last week, who it turns out may have had enough surprises for one year. The meme stock began to see its gains pared toward the end of the week as AMC announced that it planned to sell 11.5 million shares, only to then tell everyone a couple hours later that the stock offering had been completed and had raised $587.4 million in additional capital. This marks the company’s second share issue in three days after it sold 8.5 million shares to Mudrick Capital on Tuesday. After its Reddit-led rally earlier this year, the theater company saw some more impressive gains earlier in the week with a bounce of almost 100% on news that a shareholder connection platform had been created.
That wasn't all the company had to say though – AMC also basically backed what people have been saying about it for a while: that the soaring share price has no connection whatsoever to the businesses fundamentals and that investors could lose their cash. Well, maybe not in exactly those words, but the gist was there.
the company said.
Either way, at least it’s managing to swing a profit from its rise to fame, and it certainly keeps things interesting for those of us watching at home.
AMC brings out the popcornAMC decides it's time to reward all of its hard-working retail investors, and announces that anyone who’s got some skin in the AMC game will now be getting free popcorn! Excitement sends the share price popping by almost 100%. Who says there’s no such thing as a free lunch? If by lunch, you mean a tasty puffed corn treat, obvs.
It’s no secret that AMC Entertainment would not be where it is today if it weren't for its loyal flock of online retail trader fans – and now the theater chain has decided to throw its investors some love. The company said on Wednesday that its retail investors would get a free large popcorn with every visit, and also announced the launch of AMC Investor Connect. The meme stock has long since passed the point at which institutional investors became outnumbered by individual ones, and retail shareholders now own more than 80% of AMC stock, so it’s about time they opened up the dialogue.
Investors were thrilled, and the online support strengthened, sending shares of AMC up 95% on Wednesday and surpassing GameStop’s market cap – causing short-sellers a loss of $2.8 billion, bringing their year-to-date losses up to about $5 billion. AMC shares are now up a cracking 2,850% for the year alone, bringing its market cap to over $31 billion.
Grab the popcorn and let’s see what happens next.
Profit powerIn the latest in a series of capital raises for the struggling company turned meme stock, AMC makes use of its recent rally to sell 8.5 million shares to an investment firm, sending prices soaring another 22%.
Following AMC’s recent rally at the hands of its Reddit supporters, the movie theater operator is selling 8.5 million shares to investment firm Mudrick Capital. The company announced on Tuesday that it raised $230.5 million through its agreement with the investment firm, and plans to use the proceeds to buy smaller movie theater chains that have struggled during COVID.
On the same day the deal was announced, Mudrick Capital promptly went on to sell all of the AMC shares it had just bought, disposing of its stake in the company after concluding that the stock waas overvalued due to the recent wave of trader enthusiasm. This wasn't the first time the investment company had profited from betting on AMC – it lent $100 million to the company last year when cinema shutdowns were taking place, and took shares as a fee for the loan. Its share sales netted together so far have led to $200 million in profit for the fund.
said AMC CEO and President Adam Aron.
AMC on the upThe online trading troops are giving some love to their favorite meme stocks on social media, sending AMC up over 33% in two days.
AMC jumped around 20% on Tuesday to reach highs unseen since its spectacular rally at the end of January as investors shifted focus back onto retail stocks. Other fan favorites also got some love, with GameStop ending the day up 16% and Koss Corp seeing gains of around 20%. There were over 200 million shares of AMC traded on Tuesday, making it the second-most traded stock (with a value over $1) on the day.
There have been thousands of comments pouring onto social media over the past couple of days as investors urged each other to hold or buy more AMC shares with the hashtag #notapenny, hitting over 17,000 posts by Tuesday afternoon. In comments all over platforms like Reddit, traders have been celebrating the rallies; and there’s been speculation that recent gains may already be pushing bearish investors to unwind their bets, leading to a short squeeze... which is what sent AMC shares soaring back in January.
said Travis Rehl, the founder of social media analytics platform HypeEquity.
The reddit army comes for AMCRemember Gamestop? Well brace yourselves, because the redditers are back for more. This time it’s AMC Entertainment, which is soaring as retail investors show the #AMCSqueeze hashtag some love, driving the stock price up over 35% for the week.
Looks like we’ve got another rally on our hands. Last Thursday was a big day for AMC stock as the #AMCSqueeze hashtag flooded Twitter and Reddit and prices jumped 23% in a single day. The stock dominated chats on the platform as retail investors once again called for a short squeeze on the stock, replacing Dogecoin as the hottest trend around.
We’ve seen this kind of action from the Reddit army before: coming together to buy and hold shares of a specific stock, usually targeting those shorted by hedge funds, in order to screw over the short sellers. AMC is a Reddit favourite, as is GameStop, and the names of both were on everyone’s lips last week after a Robinhood blog post said that users can now exercise options contracts on its app. GameStop spiked nearly 14% on Thursday, surfing on the back of the AMC trend.
In the last week there have been around 133,000 Reddit interactions for the term “AMC”, according to Facebook’s CrowdTangle data tool.
The jump came at a good time for the firm, which recently completed the 43 million shares at-the-market equity offering they announced in April, bringing in a sweet $438 million of fresh cash for the company to pay off some of its debt and weather the COVID storm.
AMC reported a net loss of $4.6 billion in 2020 and revenue dropped 77.3% over the past year, an illustration of how seriously the company was impacted by COVID. As fun as it is to trend on Twitter, it’s a canny company that can translate 15 minutes of fame into a genuine comeback.
said Wedbush Securities’ Alicia Reese.
AMC on the reboundAMC Entertainment ends the week on a high, skipping just under 6% on earnings that missed expectations but gave us a sneak preview of what the market seems to think could be sunnier days to come.
The firm reported first quarter losses of $567.2 million, or $1.42 per share, an improvement from the loss of $2 billion from the same quarter last year. Sales totaled $148.3 million, down from $941.5 million in Q1 2020, mostly because of the wacking great non-cash impairment charges faced by movie theatre chains as Covid forced closures around the world.
The report wasn’t a huge shock to investors or analysts as the company gave a preview of what Q1 figures would look like the week before, anticipating a drop in sales of $148 million, compared to $941 million a year ago. AMC also announced plans to sell up to 43 million share in a so-called “at the market” offering. As of the end of Q1, the group was operating 585 theatres across the U.S. at a capacity of up to 60% and represented around 99% of domestic theatres and 27% of international theatres. Investors and analysts are keen to know when those theaters might be full enough to boost AMC’s revenue back to anywhere near previous levels. Shares have pretty much been on the decline since the start of the pandemic though, losing 5.18% in the past week.
The company didn't provide a specific forecast for Q2 or full year 2021, but CEO Adam Aron did address leftover liquidity concerns.
Over the past thirteen months, AMC has raised approximately $2.9 billion of gross cash proceeds from new debt and equity capital, secured around $1.2 billion of concessions from lenders and landlords, obtained more than $150 million of assistance from European governments, and generated more than $80 million from asset sales.
Can AMC Entertainment stay afloat?Struggling cinema company AMC Entertainment crashes by over 15% as news hits that Disney will launch two of its highly anticipated new films on Disney+ the same day as their movie theater release.
AMC has had a rough ride of it since COVID hit and we all stopped leaving the house, and in December the firm warned that it would go bankrupt in January without more funding. The movie theater chain lost almost $4.6 billion (enough $$ for a 65 million year subscription to Disney+) on 77% less revenue than it generated in 2019. The numbers aren’t looking good.
In a last-minute reprieve, the company secured $917 million in investment capital at the end of January, and in yet another surprise plot twist, found itself the latest target of the Reddit amateur trading army that had just taken up GameStop, sending prices skyrocketing more than 300%.
However, COVID aside, AMC still has to compete with streaming services, whose popularity (and profits) have ballooned during lockdown. Netflix saw annual revenue hit a whopping $25 billion in 2020, while Disney gained $32 billion in market value in December 2020 with shares jumping 12% on news that Disney Plus subscribers were expected to triple by 2024.
Premium content is now the name of the game and Studios are also becoming increasingly OK with bypassing cinemas. Warner Media debuted Wonder Woman 1984 in cinemas and on HBO Plus at the same time on December 16, 2020, and the studio has said it will do the same dual-viewability for all its films this year. This week it was announced that two of Disney’s flagship films for 2021, Black Widow and Cruella, will be available online for just $7 a month subscription, and the firm has now begun a complete top-down reorganization to prioritize streaming after a successful pay-per-view run with Mulan last year.
So even though AMC announced last week that it would open 99% of its U.S. cinema locations by March 26, it could still struggle to fill seats when the alternative is sweatpants and snacks from the comfort of your own couch. And as well as markedly lower levels of traffic, the company will also have to deal with higher COVID-related costs to maintain cleaning and safety standards and the pressure that will put on its profitability going forward.
The other option is acquisition – with some far-fetched forecasters out there even suggesting that Disney could buy AMC itself. We’re not quite there yet – but the way things are going, it might only be a matter of time...