AMC Entertainment’s shares climbed up by close to $10 or 31% just after the opening bell on Wednesday 2 June, stopping just short of $42 and setting an all-time record for the cinema operator. After a short pullback under $40, the shares resumed their rally and jumped to $42.5 (at 15:23 UTC).
AMC's shares are now trading more than 20 times above the all-time low of under $2 they reached in early January. The evolution is largely attributable to retail investors, who have banded together through Reddit and social media forums to buy the stock and fight off short-sellers who were betting on the AMC shares to fall.
The company also managed to benefit from the share price increase and has raised more than $1.3bn in fresh capital since the beginning of this year. After the latest funding round, worth $230m, AMC shares went up by more than 50% in just two days despite the revelation that the buyer of those shares sold them the next day for profit.
Free popcorn for investors
On 2 June, AMC announced that it will be rewarding its loyal individual investors for their support, which has helped the company survive its worst year in recent history. The company will launch an online platform, AMC Investor Connect, to communicate directly with individual investors. AMC had more than 3.2 million individual shareholders as of 11 March this year.
“AMC Investor Connect will put our company in direct communication with a retail investor shareholder base that owned more than 80% of AMC at last count. Many of our investors have demonstrated support and confidence in AMC. We intend to communicate often with these investors, and from time to time provide them with special benefits at our theatres,” said AMC CEO and president Adam Aron.
“We start with a free large popcorn on us, when they attend their first movie at an AMC theatre this summer,” he added.
Short-sellers pay the price
While the news gives the AMC "ape army" something else to cheer about, short-sellers continue to pile up heavy losses. On 2 June, the short positions on AMC totalled some 90.5 million shares or about 20% of the company’s float, up by about 3.4% compared to the previous week, according to Ihor Dusaniwsky, managing director of predictive analytics firm S3 Partners.
The investors holding those short positions currently sit on mark-to-market losses of about $3bn compared to the beginning of this year, including about $800m from today’s 26% price increase.
AMC has reached a market capitalisation of $19bn, which is 3.5 times its revenues in 2019, before the pandemic. The company recorded losses in 2019 and 2020.