The AMC Entertainment (NYSE:AMC) saga carries on, and today it’s not just because of Reddit investors pushing the stock up by force. It appears that AMC’s stock offerings are raising the company enough money to warrant two upgrades in the S&P Global Ratings.
The movie theater chain is raising equity like there’s no tomorrow; using the leverage from the Reddit trading frenzy to its advantage. The company has pooled together over nearly $3 billion in Q1. It is also already raising an impressive amount in Q2.
AMC finished the first quarter, announcing it earned $2.9 billion in equity over the last year. And so far in Q2, the company is raising $1.2 billion, thanks in large part to two share offerings in the last four weeks. The cinema operator has Reddit to thank for this financial come-up, as the the retail investors on the subreddit have kept trading volumes consistently high for months on end.
AMC Stock Gets a Boost as S&P Upgrades Ratings
The multiple fundraisers are helping AMC to escape a crushing amount of debt — about $5.5 billion, to be exact. For this reason, S&P Global Ratings is upgrading AMC a whole two grades, from CCC- to CCC+.
The news is causing a slight surge for AMC stock; shares were up as much as 5% in morning trading. Things are settling now to a gain of 2.5%, and trading is plodding along.
While the upgrade is an exciting turn of events, it does not suggest AMC to be out of the woods just yet. The upgrade is still well within “junk territory,” with a CCC+ rating still suggesting “significant speculative characteristics.” While the company is still labeled as “vulnerable for nonpayment” in this territory, the financial analytics company says AMC’s credit outlook is positive, which suggests a potential further upgrade. This of course will depend on AMC’s ability to pay down and refinance its debt and continue the solid growth it is seeing in its theaters.
On the date of publication, Brenden Rearick 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.
