AMC shares plunging after sale announcement is ‘common sense’ failure: Bear Traps founder
The Bear Traps Report founder and editor Larry McDonald on the ‘nasty’ side effects of meme stock volatility.
AMC Entertainment Holdings raised $587.4 million on Thursday, before commissions and fees, at an average price of approximately $50.85 per share. The fresh capital comes following the completion of an at-the-market equity offering that sold 11.55 million shares in order to help the company repay debt and fund future investments.
AMC ENTERTAINMENT STOCK PLUNGES AS MOVIE THEATER CHAIN PLANS TO SELL 11.55M SHARES
AMC skirted a bankruptcy filing in January after receiving a $917 million infusion from investors. The movie chain also recently completed the sale of 43 million shares on May 14, raising an additional $428 million, and sold 8.5 million shares to hedge fund Mudrick Capital for $230.5 million earlier this week.
"Bringing in an additional $587.4 million of new equity on top of the $658.5 million already raised this quarter results in a total equity raise in the second quarter of $1.246 billion, substantially strengthening and improving AMC’s balance sheet, providing valuable flexibility to respond to potential challenges and capitalize on attractive opportunities in the future," AMC CEO Adam Aron said in a statement.
AMC's 2020 revenue fell 78% year-over-year after the company was forced to temporarily close its theaters to mitigate the spread of COVID-19.
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Shares of the Leawood, Kansas-based movie-theater operator fell as much as 34% following the initial at-the-market offering announcement before paring their losses. They were also halted early in Thursday's trading session due to volatility.
The company warned investors in a filing on Thursday that they could "incur substantial losses" by purchasing shares of its common stock amid its recent extreme volatility.
AMC shares soared 418% in the seven trading days through Wednesday, which propelled the company’s market capitalization to more than $31 billion, bigger than approximately half the S&P 500. The stock was up 2,850% through Wednesday after finishing 2020 at $2.12, boosted by a short squeeze fueled by Reddit speculative investing forum WallStreetBets that has inflicted billions of dollars of losses on those betting against shares.
|AMC||AMC ENTERTAINMENT HOLDINGS INC||51.34||-11.21||-17.92%|
As of 2 p.m. Thursday, Ortex estimated that short interest in AMC was about 17.83% of free float. According to the analytics firm, AMC's short sellers lost about $2.75 billion on Wednesday. AMC stock closed at $51.34 per share at the end of Thursday's trading session, down about 20%.
FOX Business' Jonathan Garber contributed to this report
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