Shares of AMC Entertainment (NYSE:AMC) are surging in pre-market trading Tuesday (June 1) after the struggling movie theatre chain sold more than eight million shares to an investment firm.
AMC said in a security filing that it raised $230.5 million U.S. through a stock sale to Mudrick Capital Management. The company said it will use the funds for potential acquisitions, upgrading its theaters and lowering its debt.
Shares of AMC were up 10% in pre-market trading Tuesday on the news.
AMC’s business was halted during the pandemic, with movie theaters shut for months and major studios delaying new releases. However, the stock has become a favorite of traders on the Reddit social media chat boards and has seen wild swings in its share price in recent months.
The shares doubled last week to $26.12 per share on incredibly high volume as the speculative activity by retail traders driven by the message boards ramped up. The company has taken advantage of the price surge by selling additional shares to raise cash.
Year-to-date, AMC’s stock is up more than 1,000%.
Coming out of the pandemic, AMC has $5 billion in debt. Theaters were closed for several months to help stop the spread of the virus, and when the company reopened its doors, few consumers felt comfortable attending screenings, and movie studios held back new releases.
But now, as vaccination rates continue to rise and the number of COVID-19 cases decline, consumer confidence in returning to movie theaters has increased. Over the Memorial Day weekend, new film “A Quiet Place Part II” grossed $57 million, the biggest box office haul of any film released since the pandemic began in March 2020.
For the four-day Memorial Day weekend, the North American box office tallied more than $100 million in ticket sales.