AMC shares jump as new Meme-Stock favorite returns to form
(Bloomberg) – AMC Entertainment Holdings Inc. resumed its upward trajectory on Monday, ending two straight days of decline for the money-losing movie theater chain that has become the new favorite of meme equity investors.
The stock gained up to 25% to trade to $ 59.68 at 9:58 a.m. in New York. Shares more than doubled in the first two days of the shortened vacation last week, before returning some of those gains after insiders cashed in a wave of share sell-offs.
On the verge of bankruptcy just a few months ago, AMC is now the darling of retail traders, gaining more than 2,200% this year, ranking among the top stocks on the Russell 3000 Index. The stock’s surge allowed the company to sell shares and consolidate its precarious balance sheet. AMC is building a “strategic war chest,” B Riley analyst Eric Wold wrote in a note.
“In addition to our continued expectation that AMC could improve its balance sheet and future cash flows through debt buybacks / repayments, we may now see either acquisitions of smaller exhibitor chains or the repossession of leases from channels in trouble, ”he said.
An upcoming reshuffle of the Russell indices could pose a problem for AMC and GameStop Corp., which sparked the equity craze even in January. Their widened market caps of $ 24.6 billion and $ 18.4 billion on Friday, respectively, put them in line for a move from the Russell 2000 Small-Cap Index to the Russell 1000 Index of America’s Largest Companies. .
“The graduation of these top pilots could be the start of the end of their epic run,” Wells Fargo analysts Christopher Harvey, Gary Liebowitz and Anna Han wrote on Friday.
(Updates with Monday trading)
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