If you liked yesterday’s move in AMC Entertainment (NYSE:AMC) stock, you’re gonna love today’s sequel. AMC stock is surging more than 23% in pre-market trading by 7 a.m. Eastern after announcing an initiative to connect with retail investors.
AMC stock gained a whopping 12% in yesterday’s pre-market action after news broke that Mudrick Capital Management bought 8.5 million shares of AMC’s Class A common stock at a price of approximately $27.12 per share. And seemingly as quick as investor Jason Mudrick bought, his firm turned around and sold its entire stake after telling clients AMC was massively overvalued.
That didn’t seem to matter. A combination of trading on Tuesday afternoon and after hours stoked gains of near 23%.
The Mudrick move gave AMC a much-needed cash injection that ultimately will be used by management to reduce its more than $5 billion debt burden. It was the firm’s second assist in less than six months. In mid-December Mudrick agreed to invest $100 million to help the struggling theater chain survive the pandemic. The company then looked head for a pandemic-fueled bankruptcy.
Things changed. It ended yesterday at a near-$15 billion market capitalization.
“It is clear that fundamentals don’t support common stock levels at all (which makes sense for the Reddit crowd),” Mark Levin of Asterisk Advisors told clients. AMC stock is again among the top choice of buyers on the Robinhood app. For a second day running, more than 90% of messages on Stocktwits related to AMC featured positive sentiment toward the stock this morning.
Free Popcorn as ‘Thanks’ for 1,400% AMC Stock Rise
Speaking of “the Reddit crowd,” its attraction to AMC stock seems to know no limits. The company said that some 3.2 million retail shareholders owned more than 80% of AMC stock. And now the movie theatre operator wants to reach out to them.
This morning, the company said it would launch AMC Investor Connect to self-identify through the AMC website and “receive important AMC special offers and company updates.” The first perk of signing up? A free large popcorn when attending a move at company theatre this summer. Other shareholder-exclusive promotions, including free or discounted items, and invitations to special screenings are in the works.
“During my five-plus year tenure as CEO at AMC, I’ve taken great pride in the relationships I have forged with AMC’s owners,” CEO and president Adam Aron said in a release. “With AMC Investor Connect, that effort in relationship building will continue apace even if our shareholders now number in the millions. After all, these people are the owners of AMC, and I work for them.”
Considering that retail investors have driven up the price of AMC stock by more than 1,400% this year, getting an $8 large popcorn for free may not seem like it’s enough.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor. His Substack newsletter, TLV Strategist, covers the Israel business scene.