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AMC shares soar 10% in a day; Is the meme stock back?

AMC shares soar 10% in a day; Is the meme stock back?
Elmaz Sabovic

AMC Entertainment Holdings (NYSE: AMC) faced a severe blow from the pandemic, with movie theaters shuttering across the US in March 2020. 

Transitioning from a pandemic-stricken victim to a meme stock sensation in 2021, the company saw its stock rise to unprecedented highs of $230 per share and plummet to a mere $3 valuation.

However, the stock market’s unpredictability was once again demonstrated on April 17, when AMC stock experienced a surprising 10% surge in value within a single day.

At one point, AMC shares even spiked by 20% before stabilizing at its closing price, marking a positive 9.56% change.

AMC stock 24-hour price chart. Source: Google Finance
AMC stock 24-hour price chart. Source: Google Finance

The AMC shares, which experienced a sudden surge without apparent news, also ended a four-day losing streak.

No apparent news to spur the surge, albeit optimism from the CEO

Last week, AMC’s CEO, Adam Aron, expressed strong confidence in the movie-theater chain’s resilience, stating that Chapter 11 bankruptcy is ‘inconceivable’ despite recent challenges. 

Aron emphasized AMC’s robust pre-pandemic position and dismissed comparisons to Regal Cinemas’ restructuring. 

He highlighted the company’s proactive measures, such as completing a $350 million equity offering in December to address its debt. 

According to the company’s fourth-quarter earnings release, AMC’s total debt, including finance leases, stood at approximately $4.56 billion by the end of 2023, down from $5.01 billion the previous year, indicating progress in debt reduction efforts.

Aron’s belief in AMC stock could probably stem from his insider trading activities that have earned him a substantial amount of over $126 million.

$250 million worth of AMC stock offering to tackle debt

In the previous month, AMC initiated plans to sell up to $250 million in stock. During the conference call addressing AMC’s fourth-quarter results, Aron emphasized the critical importance of cash. He cited the $418 million from converting the company’s AMC preferred equity units into common stock in August 2023.

This strategy is driving AMC stock in the negative direction for now. However, it may be beneficial for AMC shares in the long run.

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