Shares in AMC entertainment rose again on Tuesday after the theater chain sold more than 8 million shares to an investment firm, the latest in a series of capital increases for the troubled company that became Meme Stock.
AMC announced in a securities filing that it raised $ 230.5 million through a stock sale to Mudrick Capital Management. The company said it will use the funds to make potential acquisitions, upgrade its theaters and reduce debt on its balance sheet.
In pre-trading hours, stocks rose 10%.
AMC’s business was effectively shut down during the pandemic, with cinemas closed for months in most parts of the country and large studios delaying releases during the pandemic. The stock, however, was a favorite of traders on Reddit and has seen wild swings in the past few months.
The shares doubled last week to incredibly high volumes as retailer speculative activity fueled by the message board resumed.
The company took advantage of these price jumps by selling additional shares to raise cash. The stock is up more than 1,000% since the start of the year.
“Given that AMC is raising hundreds of millions of dollars, this is an extremely positive result for our shareholders,” said Adam Aron, CEO and President of AMC, in a filing. “We achieved this by issuing just 8.5 million shares, which is less than 1.7% of our issued share capital and only a small fraction of our typical daily trading volume.”
AMC has roughly $ 5 billion in debt and has had to defer lease repayments of $ 450 million as its revenues largely dried up during the ongoing coronavirus pandemic. Theaters were closed for several months to stop the virus from spreading, and when the company reopened its doors, few consumers were comfortable attending screenings and movie studios withheld new releases.
Now that vaccination rates continue to rise and the number of coronavirus cases declines, consumer confidence in returning to theaters has increased. Not to mention the studios are finally releasing new content.
Over the weekend, John Krasinski’s “A Quiet Place Part II,” the sequel to his 2018 blockbuster, raised $ 48.4 million over Friday, Saturday and Sunday, the highest three-day loot of any movie release during the pandemic.
Throughout the four-day Memorial Day weekend, the North American box office made nearly $ 100 million in ticket sales.
While early box office revenues are promising, fundamental elements of the cinema business have changed over the past year, including cinema capacity, joint release dates with streaming services, and the number of days films are shown in theaters.
—With reporting from Sarah Whitten.