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International Business Times
International Business Times
Business
Ann Resuma

AMC Makes Huge Comeback After Meme Stock Trade Help $250 Million Stock Sale

AMC Entertainment announced a $28 million investment in a mining company as it diversifies from the movie theater business (Credit: GETTY IMAGES NORTH AMERICA via AFP / SCOTT OLSON)

AMC Entertainment raised $250 million as "new equity capital" after it put up for sale its 72.5 million shares on Monday. A huge chunk of the credit goes to the revival of the meme stock trade.

The equity offering of the company was launched initially on March 28, and when the meme trade roared back to life on Monday, it ushered in some great news for the struggling theater chain, which eventually led to completion of the equity offering.

The resurfacing of "Roaring Kitty," or Keith Gill has driven the shares of GameStop soaring, and AMC was among the beneficiaries as the company's shares likewise shot up, CNBC reported.

"The fact that Roaring Kitty is back should be totally meaningless to the stock market (but) the fact that it isn't is fascinating," said Matthew Tuttle, the CEO of Tuttle Capital Management.

At closing on Monday, both stocks of AMC and GameStop saw significant increases in value. AMC alone saw more than 78% increase while GameStop was able to rally almost 75%. Both shares almost doubled in value, Reuters reported.

As per the SEC filing, the shared of AMC were sold at $3.45 per share. Came Tuesday morning and they were already trading at a price of as much as $10.70.

This is a very welcoming development for AMC since their struggle during and post-pandemic did not escape the public's eye. The sluggish return of moviegoers to theaters greatly impacted the company's revenues.

On May 8, the company's most recent quarterly report was released and it could be seen that AMC earned a$951.4 million, a number lower than the revenues of the company during the same period the previous year. However, the losses of the company improved as it showed a $0.62 earnings per share loss in the first quarter, as compared to $1.71 loss that was seen in the previous year during the same quarter.

"AMC has an opportunity to drive revenue growth from its European circuit with theater upgrades that would boost per-screen averages," Reese wrote.

Since Friday's close, the shares of GameStop have nearly tripled in value. In fact, its market capitalization jumped to a whopping $16 billion.

On the other hand, short sellers lost $1.6 billion on paper on Tuesday. Ortex Technologies, an analytics firm, revealed that taking combined losses since Monday, it runs up to $2.4 billion.

"Today's losses will put a lot of short sellers on tilt and squeeze them out of their positions with their buy-to-covers pushing GME's stock price even higher," said Ihor Dusaniwsky of S3 Partners.

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