What Is AMC Entertainment? Here’s Why This ‘Meme-Stock’ Touched New Heights: Twitter Reacts

AMC stock

AMC Entertainment Holdings, or American Multi-Cinema, founded in 1920, is an American movie theater chain headquartered in Leawood, Kansas, and is the largest movie theatre chain in the world. The movie-theater chain has a market value of more than $30 billion, making it more valuable than at least half of the companies in the S&P 500 Index.

What happened with AMC’s stock?

AMC has been labelled a “meme stock” which means it captured the attention of a group of investors who are active online.

On Wednesday, the stocks of AMC Entertainment rose to a record high of 95% in the last regular session, and gained 13% to $71.01 in New York. Much like the case of GameStop‘s Stock in January, AMC first gained attention on Reddit on a thread WallStreetBets.

The new ‘meme-stock’ is reaching even greater heights than GameStop Corps did. GameStop currently sits at $21 billion after reaching a high of $25 billion in January during it’s surge.

“AMC and meme stocks are somewhat the modern and accelerated version of tulip bulbs frenzy in the 17th century,” said Sylvain Goyon, a Paris-based strategist at Oddo BHF. “The shares rise with the hype and die without it.”

Shares of the movie-theater chain nearly doubled on Wednesday — adding to Tuesday’s 23% gain — after it announced a program called AMC Investor Connect that will reward small-time investors with goodies such as special screenings and free popcorn. The surged pushed AMC’s stock price to a record high of 390% in just two weeks.

“When a fresh pile on, sparked by the offer of free popcorn, leads to a doubling of the share price in just a day, it shows a huge disconnect between price and underlying value,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said by email.

The stock nearly doubled in value yesterday, and hit $62.55 as markets closed in New York yesterday evening.

Why is AMC stock going up?

The company’s shares first went up dramatically in January after being targeted by investors who were active on Reddit. However, the prices back then dropped, only to rise to a record high in May.

The aim of the amateur investors on Reddit for doing this is to make professional investors lose their money, since they bet on the share price going down.

Last month, AMC raised $428 million by selling shares in the company, giving it fresh cash to spend on the business.

Cinema chains are starting to reopen again, after they were forced to close due to the lockdowns cause by the pandemic. It’s not often that companies try to sell their stock alongside a warning that, if you buy shares, you could lose it all.

But that’s exactly what AMC Entertainment did on Thursday when it talked about it’s plans to sell up to 11.55 million shares in a bid to capitalising on the incredible surge in its stock price fuelled by retail traders banding together online to hurt sophisticated Wall Street investors.

“We believe that the recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last,” the company warned in a Securities and Exchange Commission filing. “Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.”

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Twitter Reactions

The internet went wild when it saw another case of GameStop take place, and took to their twitter accounts to share their views.

Also Read: China Puts A Ban On Cryptocurrencies: Bitcoin, Ethereum, Dogecoin, And Many More Experience Huge Drop

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