AMC Entertainment Holdings (NYSE: AMC) stock soared over 30% in intraday trading Tuesday as the beleaguered theater chain strategically taps into the meme frenzy, successfully raising $250 million in “new equity capital” by selling 72.5 million shares on Monday.
AMC Entertainment (NYSE: AMC) recently wrapped up its at-the-market (ATM) offering, raising $250 million through selling 72.5 million shares. The completion of the offering, announced on March 28, comes at an average price of $3.45 per share.
The timing of this offering’s completion coincides with the resurgence of Keith Gill, aka Roaring Kitty, a prominent figure in the 2021 meme stock craze.
Keith Gill returned to social media after a nearly three-year hiatus. On Sunday, Gill posted a cryptic image of a gamer leaning forward in his chair. He followed this post with several video posts from action movies and TV shows. Speculation is rife that the account of Gill was either hacked or sold, but this remains unconfirmed.
In the wake of Gill’s resurgence, meme stocks such as GameStop (NYSE: GME) and AMC experienced a meteoric rise, with AMC stock soaring over 100% in the past five trading days alone.
AMC Completes $250 Million ATM Offering
However, AMC’s decision to complete its offering at the current juncture has raised eyebrows among investors, with some suggesting that waiting for a more opportune moment could have resulted in a higher offering price and consequently fewer shares being issued. This, in turn, would have mitigated the dilution effect on existing shareholders.
In its first-quarter earnings report, AMC disclosed a significant uptick in shares outstanding. The figure surged to 263.4 million, a 91.7% increase from the previous year’s 137.4 million. This increase stemmed from various factors, including APE shares conversion into AMC and a 1-for-10 reverse stock split.
Despite the recent influx of capital from the stock offering, AMC still faces a significant debt burden. Corporate borrowings stand at $4.54 billion, outweighing the company’s cash and cash equivalents, which totaled $624.2 million as of March 31.
Looking forward, some industry analysts suggest that another offering could be on the horizon for AMC to take advantage of its current stock surge. While such a move may raise concerns among shareholders regarding further dilution, it could benefit the company’s financial health, particularly if the meme stock craze continues unabated.
AMC Entertainment (NYSE: AMC) Stock Reaction
AMC stock surged 31.98% to close at $6.85 on Tuesday. Its value increased by 114.73% this week. Trading activity has witnessed 610,109,509 (610.10 million) shares changing hands, well above the average daily volume of 25.49 million.
