Shares of leading exhibitor AMC Entertainment climbed 53% on high trading volume as a betting frenzy by individual traders clustering online closed a week of havoc on Wall Street.
The rally left AMC stock at $ 13.19 heading into the weekend, almost triple what it was a week ago. He wiped Thursday’s declines from a list of heavily shorted-out companies led by retailer GameStop, after several online brokers put the brakes on trading.
As the financial system scrambled for remedies – and some investors filed class action lawsuits against online companies like Robinhood for blocking transactions – AMC pondered its options. Several press reports have indicated that the company is considering another sell-off of shares to turn stock market dynamics to its advantage. (The company did not respond to Deadline’s request for comment.) After successfully avoiding bankruptcy during the 100-year Covid-19 disaster, the theater chain earlier obtained much-needed relief due to Wednesday’s push. One of its major backers, private equity firm Silver Lake Group, converted $ 600 million of debt into AMC shares, increasing its stake.
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The role of Reddit-based individual investors has sparked a fierce debate over stock speculation and whether or not Wall Street should be the province of so-called “professionals,” as opposed to traders. As soon as several trading platforms Online have lifted restrictions on some stocks, the money returned as retail investors sought to continue squeezing hedge funds and others bet some stocks would go down.
The SEC responded to the fury over the volatile market action by saying it would investigate, even though a press release today was largely a collection of platitudes. “We will act to protect retail investors when the facts demonstrate abusive or manipulative business activity that is prohibited by federal securities laws,” the regulator said.
As AMC stock flourished, the Down Jones Industrial Average, Nasdaq and S&P 500 all fell more than 1% and nearly all media and tech stocks ended the day in the red. The volatile moment for markets comes amid much wider uncertainty as investors struggle to predict how well coronavirus vaccines will boost economic recovery and whether Federal Reserve policies will help or l ‘will hinder.
In another twist in the AMC saga, the company before its share price surge had announced a groundbreaking new round of funding and a total of more than $ 900 million in new cash raised since December. Stating that “the sun is shining for AMC,” CEO Adam Aron said on Monday the company would have enough cash to last until the second half of 2021 even if the marquees remained dark.
Eric Wold, an analyst at B Riley who has an optimistic view of the exposure’s ability to bounce back from the pandemic, told Deadline that he suspects AMC is seriously considering cashing in again. Its shares, which have been stuck between $ 2 and $ 4 for most of the past year, soared 300% to nearly $ 20 on Wednesday. “I suspect they would like to have a little more cushion,” Wold said. “Why not take advantage of a price several times higher than it was before?”