One of the most volatile stocks on the Street of late has been AMC Entertainment (NYSE:AMC). Indeed, AMC stock has soared and plunged on numerous occasions thus far this year. Still nearly 20 times where it was trading to start the year, AMC stock represents a key battleground for retail investors against the institution.
As one of the initial meme stocks, AMC stock has gone from around $2 per share to start the year to more than $40 today. During its recent June meme rally, shares of AMC stock hit a high of more than $70 per share. These sorts of outsized moves have made many traders a lot of money in a short amount of time.
Of course, as with any meme stock, volatility is likely to remain the name of the game. How popular AMC stock continues to be among the retail investing crowd is a real determinant of how this stock does. Recent moves such as the company’s shift toward accepting cryptocurrency as payment appear to be a hit. However, many investors note this company has a long way to go to make a fundamental case to own this stock.
Here’s a recent announcement that may do just that.
AMC Stock Higher As Company Repays Debt
One of the key focal points bears have had with AMC stock is the level of debt, and interest payments this company is making on that debt, due to the cash burn this company has seen throughout the pandemic.
Yesterday, AMC announced the company has exercised an option to repurchase its debt. Let’s dive into a few things investors may want to know about this move:
- The company announced it would be repaying $35 million of debt, exercising an option to do so.
- This debt carried an interest rate of 15% cash/17% in-kind.
- Indeed, by any standards, this interest rate is high.
- Accordingly, in a bid to improve the company’s cash flow situation, CEO Adam Aron made the call to eliminate this debt.
- Doing so will allow the company to free up more than $5 million in cash flow each year.
On the date of publication, Chris MacDonald 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.