Shares climbed 36% to US $ 26.52, with 691 million shares changing hands, during the busiest day since January for the Leawood, Kansas-based company. The four-day rally more than doubled its share price, taking its year-to-date gains to 1,150%.
AMC’s revival was fueled by individual investors keen to save the movie industry after raising more than US $ 1 billion in funding to avert bankruptcy in recent months.
CEO Adam Aron embraced the Reddit-powered rally and spoke to new retail investors on conference calls. The stock has roughly tripled since AMC released its quarterly results on May 6, adding a value of $ 9 billion. Thursday’s milestone stands out from a market value low of $ 216.8 million that was reached in April 2020.
While Chad Beynon, an analyst at Macquarie Securities, waits for AMC to continue deleveraging and lease bonds before becoming more constructive on equities, he acknowledged the madness that individual investors can create.
“The Reddit crowd is strong, volumes have been off the charts lately, so there is clearly a demand that wasn’t there before COVID,” he said by phone. The company’s ability to raise cash above US $ 10 per share earlier in the month “marked the first time the company has been able to benefit financially from the Reddit rally,” he said.
The money AMC raised from the sale of hundreds of millions of additional stocks is a key factor in the massive increase in market value despite the stock falling more than 25% from its 2015 high. More than 490 million shares of AMC are currently available for trading, according to data compiled by Bloomberg, nearly ten times the 52 million shares outstanding at the start of last year.
AMC-linked debt rallied alongside equities, setting new highs in recent days. The company’s bonds, which were trading at a low of 5 cents in November, are approaching par, according to trading data from Trace. This debt carries a good coupon of 12% for the notes maturing 2026.
AMC bonds were among the best performers in the US high yield market on Thursday, extending gains from the start of the week.
The company has previously said it may seek more financing, and some investors have suggested that it sell more shares to repay or seek to refinance its debt of more than US $ 10 billion.
The movie chain “will carefully consider raising additional capital in whatever form we find most attractive” and is focusing on deleveraging, Aron said on a call to discuss fourth quarter results in March.
The company’s latest resurgence in the hands of individual investors has pushed the market value to more than double its April 2017 high of US $ 4.17 billion ahead of this year’s trading. In other words, AMC has consistently added over US $ 1 billion in each of the past three sessions, more than double its value at the start of the year.
The film company’s ability to deliver solid box office numbers when it reopens in key markets like New York and California will be important, said Eric Wold, analyst at B. Riley Securities, by telephone. Wold demoted the shares to neutral from Wednesday’s buy citing valuation concerns.