AMC Entertainment successfully raised approximately $250 million in new equity capital through a sale of 72.5 million shares in an at-the-market offering. The offering, which began on March 28, saw the shares being sold at an average price of $3.45 per share before commissions and fees. Following the completion of the sale, AMC’s stock price soared by 94% on Tuesday, prompting a temporary pause in trading due to volatility.
The resurgence of “Roaring Kitty” in the meme stock craze played a significant role in driving up AMC’s stock price. His online presence and a cryptic image led to a buying frenzy among amateur traders, resulting in a 78% increase in AMC’s stock price to $5.19 at the close of Monday’s trading session. This, coupled with the 21% increase in stock price from the previous Friday, likely motivated AMC to complete its equity sale at the elevated prices.
Interestingly, the surge in AMC’s stock price mirrored the movement seen in GameStop’s shares, which surged by 74% on Monday and over 100% on Tuesday, with multiple trading halts for volatility. It is worth noting that both companies experienced a similar phenomenon with the involvement of retail investors and a sense of urgency in buying shares.
The equity offering was facilitated by several sales agents, including Citigroup, Barclays, B. Riley Securities, and Goldman Sachs. These firms played a crucial role in the successful completion of the offering, highlighting the importance of well-established financial institutions in capital raising activities.
While the equity raise was successful in raising a substantial amount of capital for AMC Entertainment, the volatility in stock prices raises concerns about the sustainability of such movements. The reliance on social media influencers and retail investors to drive up stock prices could potentially lead to speculative behavior and market inefficiencies.
AMC Entertainment’s equity capital raise amidst the meme stock craze highlights the power of social media and retail investors in influencing stock prices. While the successful completion of the offering may have provided much-needed capital for the company, the long-term implications of such volatile movements remain to be seen. It is essential for investors to exercise caution and conduct thorough research before participating in such speculative trading activities.