AMC Stock Doubles After Execs Lure Traders with Free Popcorn
AMC shares spike 95% in a wild day of high retail-trading activity in the market. Other meme-stock favorites also receive a solid boost.
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- AMC shares spike 95% in a wild day of high retail-trading activity in the market
- Other meme-stock favorites, such as GameStop and Blackberry also receive a solid boost
AMC Entertainment shares surged as much as 127% during the regular trading session on Wednesday and closed the day near the peak, at $62.55, up 95.22%. At the intraday high, the stock marked an increase for the year of 3,000%, outperforming any other US stock for the same period. By comparison, the second-best performer is GameStop with a year-to-date result of 1,500%. Upstart Holdings ranks third, with gains of 257% for the year.
The wildest trading day in AMC’s history came after executives at the cinema chain decided to embrace the retail investing community and encourage their enthusiasm. It announced an offer of free popcorn for investors who signed up as members on their website. Following the announcement, the stock surged to record highs due to the high concentration of shares in individual traders.
Retail, or amateur investors, own 80% of the company’s stock. By offering free popcorn as an incentive, the company aims to turn around its money-losing operations and lift up the stock’s valuation as well as bring new customers to see movies. Investors devoured the popcorn offer and, soon after, the stock soared to levels near $75. That’s three times what it was earlier in the week and many times what it was earlier in the year when a share was worth around $2.
Other Meme Stocks Thrive
The stampede into AMC was so intense yesterday that trading had to halt by certain exchanges a few times. AMC stock easily became the most actively traded stock on US exchanges yesterday. Other meme-stocks, such as GameStop and BlackBerry, also posted substantial gains on Wednesday as the retail-trading army spread to other favored assets. Shares of GameStop gained $33.22, or 13.34%, to end the session at $282.24. BlackBerry’s stock advanced $3.69, or 31.92% to finish trading at $15.25.
The spectacular move in the AMC stock largely echoed the meme-stock trading frenzy that rattled the US stock market in January when GameStop shares skyrocketed fueled by retail investors’ money. Terms like “stonks”, “diamond hands” and “to the moon” were quickly back in fashion as the retail-trading army coordinated efforts to pile into their favorite trades.
Professionals in the financial sector were largely taken aback by yesterday’s crazy bull run. “It is clear that fundamentals don’t support common stock levels at all (which makes sense for the Reddit crowd),” Mark Levin of Asterisk Advisors said in a note. The company was on the brink of bankruptcy a few months ago when the pandemic forced movie theaters to close across the US. A year ago, its market capitalization stood at $216mn. The company still has a debt of $5bn.
A day before the massive rally took place, Mudrick Capital, a hedge fund managing over $4bn, contributed to a rise in AMC’s share price when the investment firm disclosed it had bought $230.5mn of fresh shares to bolster AMC’s finances. The same day when the purchase was made, the stock’s price advanced over 20% and the hedge fund promptly sold all its AMC stock for a tidy profit.