Put another one in the win column for the meme-stockers.
Driven in large part by the enthusiasm of small-time traders in the Reddit forum known as “Wall Street Bets,” AMC’s share price skyrocketed by more than a 100% on Wednesday and more than 3000% this year to hit above $70 — an all-time high that marks the best performance of any stock in 2021 (yes, including GameStop). The reddit investors were quick to celebrate, sending the hashtag #AMCArmy trending.
News that AMC sold 8.5 million common shares to hedge fund Mudrick Capital for $231 million, diluting the stock, could have been interpreted as a sign of weakness. Instead, Redditors took AMC’s word that it plans to use the increased liquidity to go “on offense” and aggressively pursue the “most valuable theatre assets, as well as to make other strategic investments.” After Mudrick turned around and sold its shares on Tuesday, CNBC reported the firm may have “missed out on more than $300 million by dumping AMC a day early.”
AMC’s surge grew so volatile, the NYSE temporarily halted trading several times throughout the day.
When the stock last rallied in late January, brokerage app Robinhood blocked sales. Many small traders assumed the platform was once again at fault for today’s pauses, leading the company to plead its innocence on Twitter: “Speculation that Robinhood has halted trading in $AMC is not accurate. Earlier today, the NYSE implemented a volatility trading pause of $AMC,” it said.
Since AMC first became a favorite of the redditors, the theater chain has been careful to court their continued allegiance. CEO Adam Aaron announced a new program Wednesday that will reward small traders with perks like free movie popcorn.
“AMC Investor Connect will put our Company in direct communication with a retail investor shareholder base that owned more than 80% of AMC at last count,” Aron said. “Many of our investors have demonstrated support and confidence in AMC. We intend to communicate often with these investors, and from time to time provide them with special benefits at our theatres. We start with a free large popcorn on us, when they attend their first movie at an AMC theatre this summer.”
Given that meme stock investors have helped the company avoid bankruptcy and wipe out $600 million of debt, some bonus concession treats is the least AMC can do, something Aron seems to recognize. Unlike GameStop CEO George Sherman, who has largely stayed mum on the favor WallStreetBets bestowed on his company, Aron has been declaring his gratitude for the world to hear.
“AMC now has an army of passionate, interested individual shareholders, some 3 million strong,” he said on earnings call in early May. “These individual investors likely own a majority of our shares, they own AMC. We work for them. I work for them. By definition, their interests and passions are important to AMC, their ambitions and passions are important to me.”
Immediately after this observation, Aron referenced the film “Gorillas in the Mist” and pledged to personally donate $50,000 to the Diane Fossey Gorilla Fund. The redditors, who often refer to themselves as “apes,” took that as a sign of his solidarity with them.
“AMC CEO Adam Aron announced during today’s quarterly earnings call that he will be personally donating to the Dian Fossey Gorilla Fund along with AMC. Aron truly is one of us. AMC to the Moon!!!” posted one user.
Another read it as a secret stock tip, saying, “What if Aron donated those 50k to the gorilla foundation to show us (the army) his minimum / maximum hypothesis during the [short] squeeze?”
Much as they did with Tesla CEO Elon Musk, who they call “Papa Musk,” Aron has become so popular within the forum, members have given him a nickname: “The Great Silverback.”
With Aron’s support, the WallStreetBets crowd once again proves the truth of one of their favorite taglines: “Apes together strong.”
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