AMC Entertainment Holdings Inc (NYSE: AMC) opened at $58 per share in the stock market on Thursday and tanked to a low of $40 per share after the theatre chain expressed plans of selling more than 11 million shares.
AMC”s remarks in its SEC filing
In its SEC filing on Thursday, AMC said:
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“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. 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.”
According to Frontline Compliance founder Amy Lynch, SEC’s mandate is to protect retail investors. Therefore, AMC’s explicit disclosure of the risk involved was a very smart move.
Gunjan Banerji’s comments on CNBC’s “Trading Nation”
Commenting on the retail investors driven trading frenzy in AMC shares, Wall Street Journal’s Gunjan Banerji said on CNBC’s “Trading Nation”:
“Options activity on AMC hit a record high yesterday – higher than the levels seen earlier in 2021 when GameStop frenzy first started, and higher than I’ve ever seen in my years of experience in this market. People are looking for a lottery ticket bet on AMC. They are trying to double, triple, quadruple their money within a day or even hours.”
Professor Aswath Damodaran of NYU Stern School of Business highlights that the theatre chain is in a business that is in transition. So, they are doing the right thing in taking advantage of this opportunistic moment to raise capital and prepare for the transition. AMC, he added, “is playing this game much better than GameStop”.
Pro: AMC is no longer a meme stock
The past few days have been interesting for AMC, with retail investors pushing the stock up to a record high of $70 per share on Wednesday. BNY Mellon Markets’ editor-at-large, Peter Madigan, however, does not see AMC as a meme stock anymore.
Shares of the theatre chain have been extremely volatile on Thursday. The stock recovered to $67 per share in the afternoon and has now slipped again to $51 per share. At the time of writing, AMC Entertainment Holdings Inc has a market cap of $25.83 billion.
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