• Wed. Aug 10th, 2022

AMC Embraces Meme Stock Status, Share Price Nearly Doubles

ByMike Paul

Jun 26, 2021

AMC Entertainment is welcoming the swarm of zealous buyers who shocked its shares back to life as part of this year’s “meme stock” purchasing spree after its movie theatres were closed and its stock was nearly left for dead due to the virus.

The business said on Wednesday that it will create a programme called AMC Investor Connect to keep in touch with its 3.2 million investors. Many people bought AMC stock early this year, despite professional investors fleeing, and it soared from less than $2 on Jan. 5 to $72 on Wednesday.

They’re an “amazing base of energetic and passionate individual shareholders,” according to AMC, but they’re more likely to refer to themselves as “supporters” who are driving the stock price “to the moon” while shaking up Wall Street.

AMC CEO Adam Aron stated in a statement, “After all, these folks control AMC, and I work for them.” To distinguish them from the pension funds, mutual funds, and other institutional investors that normally dominate a company’s ownership, these smaller-fry purchasers are referred to as “retail investors” in the industry. As of mid-March, individual investors made up more than 80% of AMC’s stock.

In recent years, retail investors have become a far more significant influence in the market. A new generation of traders has been attracted by easy-to-use trading applications and no trading commissions. The epidemic followed suit, leaving millions of people stranded on their couches with nothing to do.

Threads on Reddit, Twitter, and elsewhere have swiftly built momentum for several stocks, demonstrating the power of social media. It was most evident early this year, when AMC, GameStop, and a few other beaten-down companies unexpectedly rallied, surprising and astonishing Wall Street.

Aside from dramatic swings, opponents have warned that prices for investments across markets have ballooned into dangerous bubbles, such as in the volatile realm of cryptocurrencies, due to the rising weight of regular investors.

Much of professional Wall Street believes AMC’s stock has also risen too high. Its worth, according to some experts, is closer to $5 than its closing price of $62.55 on Wednesday.

AMC Investors Connect, on the other hand, will convey communications from its CEO directly to individual investors, rather than focusing on such experts. It will also provide stockholders with VIP screenings, discounts, and other incentives.

The market reacted to the new venture in a similar way to a summer blockbuster. AMC’s stock nearly doubled on Wednesday, setting a new closing high for the first time in six years, and trading was suspended four times throughout the afternoon due to the excessive volatility.

Other meme stocks were also significant movers on Wednesday, with GameStop surging 13.3% against the rest of the market’s stagnant performance. The S P 500 gained 0.1 per cent. AMC’s decision comes a day after the company announced that it will raise $230.5 million by selling 8.5 million shares of stock, cashing in on the stock market’s recent frenzy, which has seen its stock price rise 2,850 per cent this year.

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