On March 28, AMC Entertainment (NYSE:AMC) announced an up to $250 million at-the-market (ATM) offering. As of May 13, that offering has been fully completed through the sale of 72.5 million shares. Each share was sold at an average price of $3.45 while AMC stock is currently trading in the $6.50 range.
The completion of the offering comes just after the return of Roaring Kitty, whose real name is Keith Gill. Gill helped spur the 2021 meme stock craze and, after a nearly three-year hiatus, just made his return to social media with a cryptic post of a gamer leaning forward in his chair. Gill followed up his initial post with several video posts from action movies and TV shows. There is also ongoing speculation that Gill was either hacked or sold his account to someone else who made the posts, although this has not been confirmed.
Following the posts, meme stocks like GameStop (NYSE:AMC) and AMC exploded higher. AMC stock is now up more than 100% during the past five trading days.
AMC Stock: AMC Completes $250 Million ATM Offering
AMC’s timing of its offering completion is somewhat unfortunate, as it could have waited for a higher price in order to offer fewer shares, resulting in less shareholder dilution. At the same time, the return of Roaring Kitty can be seen as a black swan event. In other words, it was completely unpredictable.
The movie theater chain disclosed in its first-quarter earnings that shares outstanding had increased to 263.4 million compared to 137.4 million a year ago. That’s a significant increase of 91.7% and includes the conversion of APE shares into AMC as well as a 1-for-10 reverse stock split of AMC.
Meanwhile, AMC still has corporate borrowings of $4.54 billion compared to its cash and cash equivalents of $624.2 million as of March 31. It would be smart for the company to initiate another offering in order to take advantage of its recent stock surge. This measure may not sit well with shareholders but could be quickly swept under the rug if the meme craze continues.
On the date of publication, Eddie Pan did not hold (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.
