AMC Skyrockets After Announcing New Perks For 'Extraordinary' Reddit Traders And Retail Investors
Top line
After a recent spate of meteoric gains, AMC Entertainment's shares soared again in pre-market trading on Wednesday morning after the company announced it was launching a shareholder-only incentive program, which is the company's latest attempt at one unprecedented wave of interest from investors on Reddit boards and other social media despite longstanding concerns that the stock is overvalued.
The shares of AMC Entertainment, the world's largest cinema chain, are up more than 1,700% ...
Getty ImagesImportant facts
The new program, called AMC Investor Connect, will keep the company's "exceptional base of avid and passionate individual shareholders" updated on company information and provide them with special offers starting with a free big popcorn at their first movie screening this summer, AMC announced known on Wednesday.
In the announcement, AMC CEO Adam Aron said that as of March 11th, more than 3.2 million shareholders held a stake in AMC, representing more than 80% of the company's ownership.
Members also receive exclusive communications directly from Aron, who previously gathered around the bulk of investors, most of whom are based on Reddit.
The company says it will launch the program in coordination with the public filing of its annual shareholder proxy, which is expected as early as Thursday.
Starting at 8:35 am EDT, AMC shares rose 21% in pre-trading on Wednesday, after rising nearly 23% on Tuesday.
This isn't the first time AMC has capitalized on booming retail interest in its stock: in early May, the company raised $ 438 million in a stock offering at $ 9.94 per share - nearly five times its price at the start of the year, but roughly a third of the $ 32 stock will be valued Wednesday morning.
Surprising fact
Although AMC stock slumped more than 70% earlier this year, it's now up more than 1,700% this year.
tangent
Analysts are still incredibly pessimistic about AMC's outlook - largely given its heavy debt load and Hollywood studios increasingly turning to streaming companies for high-profile releases - with an average one-year price target of around $ 5.11
Key background
Despite declining institutional interest, AMC shares peaked at the height of a retail frenzy in late January when individual traders again teamed up on Reddit and other social media platforms to squeeze institutional investors out of their bearish bets against the stock. On Tuesday alone, institutional investors who sold the stock short lost more than $ 1 billion, according to data from the Ortex financial analyst. That's after losing more than $ 1 billion last week. Investment firm Mudrick Capital, which bought $ 230.5 million in shares on Tuesday, reportedly cashed out later in the day after calling AMC stock "overvalued," reflecting analyst sentiment. who warn that stocks are very volatile and astronomically valued.
further reading
AMC Extends Massive Meme Stock Rally After CEO Announces $ 230 Million Raise And "Aggressive" Growth Strategy (Forbes)
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