AMC Entertainment Holdings Inc. is a Leawood-based movie exhibition company and a meme stocks whose share prices are surging through the roof and can now be referred to as the king of meme stocks with over 2,900% gains in 2021. For those of you who don’t know, meme stock is any publicly traded company that is benefitting from a band of ordinary investors who use social media platforms to drive interest in the company’s shares and AMC has recently blown the market.
According to reports, retail traders are completely ignoring the financial troubles and the ever-increasing debt pile of AMC Entertainment and investing heavily into the company’s ongoing rally. These retail traders continue to buy heavily shorted stocks despite the company warning the investors that they might lose all their money.
On Wednesday, the movie theatre chain saw a 30% jump in shares stock price after it announced a new program for investors called the ‘AMC Investor Connect’. Under this program, AMC intends to reward small-time investors with free popcorns, special screenings and other goodies. As a consequence of this new business model, the company’s market capitalisation has hit a record high of USD 31 billion. The movie exhibition company has recorded over a 390% increase in stock price in the last two weeks alone. This phenomenal growth rate of AMC is what has made it the king of meme stocks.
However, the company is still in a pretty bad debt pile which has increased massively since 2016. The COVID-19 pandemic hasn’t been great for movie theatre businesses all across the globe for obvious reasons and AMC is one of them. Analysts continue to estimate the company’s worth after making approximate cuts from its financial results before taxes, interests, amortization and depreciation, as mentioned in a report by Bloomberg Quint. Not just this, analysts are predicting that AMC will once again lose over USD 100 million on the basis of its debt and other expenditures over the next 12 months. This sums up the fact that despite its short-term success, the company is still in a dump of financial disaster.
According to a report by the Wall Street Journal, AMC mentions that it would sell their stocks valued at approximately USD 722 million based on Wednesday’s closing price of USD 62.55 apiece. Furthermore, the proceeds of the sale would directly go either in the company’s debt fund or as an investment in buying new movie theatres.
Last year, the company stated that it could go bankrupt by December 2020 but as of January, AMC raised over USD 917 million in financing to rise above bankruptcy and now with its soaring share price after a continued 2,900% rally, the company has managed to raise cash twice within in just one week.