AMC climbs 9% as CEO makes pledge not to sell newly authorized shares this year

adam aron, AMC CEO
AMC CEO Adam Aron.

  • AMC climbed as much as 9% on Thursday after its CEO said the company won’t sell any of the 500 million shares its seeking to authorize.
  • Adam Aron said if the company needs to raise short-term cash it still has some shares left from a prior authorization.
  • AMC, which has been a popular meme stock, is now up more than 365% in 2021.
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AMC Entertainment shares climbed as much as 9% on Thursday after CEO Adam Aron said it will not sell in 2021 any of the 500 million shares it’s asked investors to authorize.

The company’s shareholders will vote on May 4 on whether to approve AMC’s request to increase its number of shares outstanding, which Aron plans to deploy in the coming years.

“We hereby pledge at AMC that if the shareholders approve this authorization for 500 million new shares to be issued, we will not use one of those 500 million shares in calendar year 2021. Not one,” CEO Adam Aron said in an interview published Wednesday on a YouTube program called Trey’s Trades, hosted by an independent investor.

AMC included Aron’s comments in a Thursday filing with the Securities and Exchange Commission. The company has roughly 450 million shares outstanding, according to Bloomberg.

The movie-theater operator has been working to recover from the hit the business took from the COVID-19 pandemic. The chain recently started to reopen its theaters after they closed to help reduce the spread of the respiratory disease.

Aron said in the YouTube interview that AMC still has about 43 million shares outstanding that were authorized in 2013. The company could use those shares to raise cash in the short-term if needed but that no decisions have yet been made on that matter, he said.

Asking for authorization to issue 500 million shares is part of the company’s preparation for operations on a longer-term basis, Aron said.

“If you give us the flexibility to use those shares when it makes sense for you, the shareholder, that’s when we’ll use them and not before,” said Aron.

AMC stock has surged from about $2 at the start of this year in part during major short-squeeze rallies that were fueled by retail investors active on Reddit’s Wall Street Bets forum. Shares are up more than 365% year-to-date.

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AMC soars 15% as Reddit stocks and reopening favorites buck tech sell-off

AMC Entertainment

Shares of AMC Entertainment soared 18% on Monday, joining a broader rally as Reddit darlings and reopening favorites bucked the tech sell-off. The stock pared some gains, closing 15% higher for the day.

AMC joined Reddit favorite Gamestop on Monday, which surged 43% after the video game retailer announced that board member and Chewy founder Ryan Cohen will lead its strategic transformation. Cohen has been pushing for the company to go towards a direction similar to what e-commerce giant Amazon took.

Airline companies including Delta, Southwest, United, and American, all climbed as well on optimism of an economic recovery thanks to the Senate’s approval of the administration’s $1.9 trillion stimulus plan over the weekend. Disney, meanwhile, hit a record high as California set a date of April 1 for a limited reopening of theme parks in the state.

AMC, a meme stock and another Reddit darling, also rose on news that Wedbush analyst Michael Pachter doubled his price target from $2.50 to $5.00 on optimism of a post-pandemic environment. Pachter did note his concerns about the movie theater chain’s debt burden.

The Wedbush report cited that AMC has been taking the right re-opening precautions, which has allowed it “to drive some attendance over the last several months, while many major markets were closed for several months as the virus continued to spread.”

But it also said that “AMC may take years before it is able to revisit its prior growth strategy as it repays its growing mountain of debt.”

The analyst maintained a neutral rating that has been in place since March 2020.

Since the start of the year, AMC’s stock price has skyrocketed more than 500% driven in large part by a group of retail traders on Reddit’s Wall Street Bets forum targeting stocks shorted by hedge funds.

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GameStop, AMC, and other Reddit favorites climb as day traders look to reignite momentum

GameStop Clerk
A customer laughs with a clerk as he purchases a copy of the video game “Grand Theft Auto IV” at a GameStop store in New York

  • GameStop, AMC, and other Reddit-favorite stocks gained on Monday as day traders aimed to spark rallies similar to those seen in January.
  • The group of previously unloved stocks has fluctuated in recent sessions as bullish momentum locks horns with profit-taking.
  • The day traders lack the element of surprise they enjoyed earlier in the year, and regulators are investigating whether Reddit posts fueling the previous surges constituted manipulation.
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GameStop, AMC Entertainment, and other so-called meme stocks gained on Monday as retail investors looked to fuel new rallies.

The video-game retailer rose as much as 10.1%. AMC climbed 13.7%. BlackBerry and Express swung 5.2% and 7.4% higher, respectively.

The stocks have traded with elevated volatility in recent sessions as day traders congregating online try to repeat the surges seen at the start of the year. Recent posts on r/wallstreetbets and other trading forums praising the upswing garnered thousands of comments and votes of approval. And while the companies trade well below their January highs, they still boast huge year-to-date gains.

The gains follow broad selling across the Reddit favorites. The stocks tumbled in Friday trading after rising the session prior, underscoring the back-and-forth action seen since January’s extraordinary rallies.

Retail investors looking to lift prices again face a tougher challenge. The Reddit-savvy traders had the element of surprise when they first bid up shares, and their ability to shock the market establishment quickly publicized the trade. The stocks’ unusually high short interest also exacerbated the rallies as bearish investors had to buy shares to cover their souring bets.

Those surges are old news now, and Wall Street has caught on to the Reddit traders’ antics. Hedge funds started tracking posts on relevant forums to monitor which stocks day traders could target next.

Separately, regulators are looking into the January price action to determine its legality. While the Reddit crowd has repeatedly indicated they simply “like the stock,” those warier of the sudden climbs suggest the online communication could qualify as market manipulation. 

A new report suggests bots also played a significant role in driving hype around the trade. Fake accounts on major social media platforms amplified calls to buy and hold shares of GameStop and other relevant stocks, Reuters reported, citing analysis by cybersecurity company PiiQ Media. Still, it’s unclear how much of an impact the bots had on the rallies.

Lawmakers have already taken steps to better understand the market phenomenon. The House Financial Services Committee held a hearing in February on the matter, and the Senate Banking Committee is poised to do so. 

GameStop closed at $101.74 per share on Friday, up about 428% year-to-date.

AMC closed at $8.01, up 270% year-to-date.

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AMC rips 8% higher as Reddit traders stick to their favorite meme stocks

amc movie theater nyc covid19
  • AMC gained as much as 8% on Tuesday as Reddit traders piled into the theater chain’s shares.
  • While the day-trading phenomenon died out earlier this month, Tuesday’s climb suggests the crowd still holds some sway in the market.
  • Reopenings and vaccination could lift AMC from its COVID-19 slump, one Reddit user said.
  • Watch AMC trade live here.

AMC Entertainment surged as much as 8% on Tuesday as retail investors banding together in online forums returned to the struggling theater chain.

The world’s biggest movie-theater company saw its stock price skyrocket in late January as traders in Reddit groups including r/wallstreetbets piled into highly shorted stocks. Shares soared as high as $20.36 on January 27 before plunging back to earth as the day-trader phenomenon fizzled out.

Tuesday’s price action suggests the crowd of casual investors is still somewhat in it. The gains placed shares at their highest in about a week. Posts on Wall Street Bets hailed AMC as a top recovery play and praised the company’s recent stock sales as a key lifeline. Vaccinations and economic reopening could revive AMC from its virus-induced downturn, Reddit user u/ImFedUpWithItAll said in a post detailing his bullish thesis.

“I’m not Buffett so I’m not buying for life. I’m in this for the rally to normalcy,” they added.

AMC was the most heavily traded company on the New York Stock Exchange before the market opened. Other stocks featured on Wall Street Bets fared worse. Investors looking to lift Palantir saw shares tumble in early trading. GameStop – the group’s favorite stock during the January rally – rose slightly.

Read more: GOLDMAN SACHS: These 40 heavily shorted stocks could be the next GameStop if retail traders target them – and the group has already nearly doubled over the past 3 months

The theater chain was among the few companies able to convert extraordinary retail-trader demand into a stronger balance sheet. The company raised more than $300 million last month by selling shares during the Reddit-trader rally. When coupled with a $411 million credit line, the fundraising efforts took bankruptcy talks “completely off the table,” CEO Adam Aron said in a statement.

To be sure, locations in key markets including California and New York remain closed as COVID-19 cases rise across the country. The halt to regular operations endangered the company earlier in the pandemic and forced warnings of extinguished cash reserves.

Daily COVID-19 case counts have since fallen, prompting investors to shift back into so-called reopening sectors including travel, leisure, and entertainment.

AMC closed at $5.59 on Friday, up roughly 158% year-to-date. The company has three “buy” ratings, 10 “hold” ratings, and four “sell” ratings from analysts, with a median price target of $3.99.

Read more: UBS says bitcoin is a bubble and too volatile to diversify a portfolio, unlike gold – here’s why the bank says it could end up ‘worthless’

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