As a new meme-stock favorite returns to form, AMC stock rises

In premarket trading Monday, AMC Entertainment Holdings Inc. resumed its upward trend, reversing two days of losses for the money-losing movie theater chain that's become the new favorite of meme-stock investors.


As a new meme-stock favorite returns to form, AMC stock rises.


As of 8:17 a.m. in New York, the stock was trading at $49.35, up 3% from Friday's closing. Insiders cashed in with a frenzy of share sales, and shares more than quadrupled on the first two days of a holiday-shortened previous week, before giving back some of those gains.


AMC, which was on the verge of bankruptcy only a few months ago, is now the darling of retail investors, with a year-to-date gain of 2,200 percent, the biggest of any stock in the Russell 3000 Index. The company was able to sell shares and shore up its fragile balance sheet thanks to the stock's rise. B Riley analyst Eric Wold stated in a note that AMC is putting together a "strategic war fund."


“We could now envisage either acquisitions of smaller exhibitor chains or the takeover of leases from failing chains,” he said, “in addition to our continued assumption that AMC might enhance its balance sheet and future cash flows through debt repurchases/pay-downs.”


A future overhaul of the Russell Indexes could be problematic for companies like AMC and GameStop Corp., who pioneered the meme stock frenzy in January. With market capitalization of $24.6 billion and $18.4 billion, respectively, they are poised to jump from the Russell 2000 small-cap stock index to the Russell 1000 index of the largest American corporations.

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In a note published Friday, Wells Fargo analysts Christopher Harvey, Gary Liebowitz, and Anna Han wrote, "The graduation of these high-fliers could mark the beginning of the end of their amazing run."


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