An AMC theatre is pictured 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, reaching record highs.
The stock closed at an all-time high of $62.55 per share, nearly double Tuesday’s closing price. Its previous closing record had been $35.86, which was set on March 23, 2015, according to FactSet data.
At one point, AMC’s stock spiked as high as $72.62, far above its previous intraday high of $36.72, which occurred on Friday.
As retail traders have rallied around AMC, the movie theater chain has returned the favor.
AMC executives have embraced its new investors, who have fueled massive gains for the company in recent months. On Wednesday, the company made special efforts to communicate with this new base, offering up free popcorn and the promise of exclusive movie screenings to those that held its stock.
The manic activity comes despite a report that a hedge fund had sold its stake in the movie theater company. On Tuesday, AMC reported it had sold 8.5 million newly issued shares to Mudrick Capital, the latest in a series of capital raises 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, upgrade its theaters and deleverage its balance sheet.
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The hedge fund later turned around and sold all of its AMC stock for a profit, according to Bloomberg News.
Typically, such a sale would prompt a sell-off because the newly issued shares dilute the value of the existing stock. Instead the stock climbed higher.
On Wednesday, trading was robust. The stock was halted several times as it soared to new heights. At the end of the day more than 710 million shares were exchanged, nearly double the number of AMC’s 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 up in the buying frenzy. Bed Bath & Beyond shares were particularly active, closing at $44.19, up 62%. That was its highest close since Jan. 27.
Last week, Bank of America said chatter was picking up again in these stocks. Since then trading, has been more active.
The run-up in AMC’s stock has resulted in CEO Adam Aron seeing his own wealth soar by more than $200 million since the start of the year. It’s been a breathtaking change of fortune for the company, which saw its business was effectively halted during the pandemic. Cinemas were shuttered in most of the country for months. With no money coming in from ticket sales and concessions, AMC fell behind on its rent. On the brink of bankruptcy, short sellers swarmed the stock.
Retail investors inspired by Reddit chats have used their growing numbers to fight back. Last week, investors shorting the stock were estimated to have lost $1.23 billion as the shares rallied more than 116%, according to data from S3 Partners. The stock is up more than 2,850% year to date.