AMC Entertainment Holdings, Inc. (NYSE:AMC) rose sharply Monday after dropping around 7% on Friday. As per a Reuters report, Wall Street traders are continuing to bet against the stock, although have reduced their reliance on short selling.
The largest movie theater company in the world became the latest poster child of meme stock mania, as Reddit message board WallStreetBets fueled a massive spike in this beaten-down, highly shorted stock as the economy inched closer to a full reopening.
The massive move came in spite of a first quarter earnings report showing a huge cash burn of $325 million, more dilutive equity sales to keep itself afloat, and the company’s largest shareholder for the past nine years selling its entire stake.
While AMC did report substantial first quarter cash burn at the beginning of the month, its U.S. theaters were only operating at 15% to 60% capacity in the March quarter, and only 27% of international theaters were open, also at limited capacity. With vaccinations accelerating faster than thought since March, reopening optimism apparently reignited the WallStreetBets message board on Reddit, because AMC’s stock began appreciating shortly after earnings.
On May 13, a few days after earnings, AMC sold another 43 million shares for $428 million, at nearly $10 per share. Given that the company had sold shares in the low-single digits last fall and winter, selling shares at $10 may have seemed like a great deal… if only management knew what was coming!
AMC gained $6.68, or 13.9%, to $54.66.