A $230 million equity injection has given a boost to the shares of AMC Entertainment (NYSE:AMC) this morning. AMC stock was up almost 12% at 7:15 a.m. Eastern.
That injection is coming from Mudrick Capital Management, which is buying 8.5 million shares of AMC’s Class A common stock at a price of approximately $27.12 per share, according to an AMC press release.
AMC stock closed on Friday at 26.12 per share after touching a a four-year high a day earlier. The meme stock has been on quite a ride this year, catapulting 1,132% year to date while the S&P 500 has gained 11.9%.
Movie goers are set to benefit from the new money, as AMC said the proceeds from the sale will be used to acquire additional theatre leases, as well for investments to enhance the consumer appeal of AMC’s existing theatres. “In addition, with these funds in hand, AMC intends to continue exploring deleveraging opportunities,” the company’s release read.
AMC Stock Looks Set to Continue Meme Gains
The meme frenzy that has brought fortune to many retail investors this year shows little sign of slowing as Americans leave their pandemic lockdowns and head into summer. Shares of security software provider BlackBerry (NYSE:BB), were up 7.9% premarket, while video game retailer GameStop (NYSE:GME) was trading 4.27% higher.
AMC stock and GME shares are the top choice of buyers on the Robinhood app, Reuters reported. Nearly 96% of messages on Stocktwits related to AMC featured positive sentiment toward the stock this morning, the news agency said.
InvestorPlace contributor Joseph Nograles last week opined that trading on memes has never been a strategy that works out in the long run. However, “there is a strong bullish case to be made for AMC stock as a reopening play,” he advised.
He noted that with its position as the largest theatre operator in the United States, AMC is well-poised to take advantage of these macroeconomic tailwinds.
Now, management has got $230 million more in cash to use in that pursuit.
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.