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AMC Looks to Cash In - Again - on Reddit-Fueled Price Rally

AMC Entertainment is looking to raise even more capital through yet another stock sale as it seeks to take advantage of this week’s Reddit-fueled share-price rally.

AMC Entertainment  (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report will look to raise even more capital through yet another possible stock sale as it seeks to take advantage of this week’s Reddit-fueled share-price rally that has pushed its stock up more than fourfold in a matter of days.

Citing people familiar with the matter, CNBC reported that AMC was considering issuing more stock as a way to bolster its war chest of cash that it wants to use to keep its 1,000-plus global movie theaters operating while it remains hampered by the pandemic.

AMC has been swept in a wave of volatility this week amid a David-and-Goliath battle between retail investors using an online Reddit message board called WallStreetBets to collectively push shares of GameStop  (GME) - Get GameStop Corp. Class A Report, BlackBerry  (BB) - Get BlackBerry Limited Report, Express  (EXPR) - Get Express, Inc. Report, Bed Bath & Beyond  (BBBY) - Get Bed Bath & Beyond Inc. Report, Naked Brand  (NAKD) - Get Cenntro Electric Group Limited Report and others higher in a bid to force hedge funds and other large investors to abandon their short positions in those companies.

On Monday morning, AMC stock stood at $4.60, up 31.2%. The shares ended the trading day Thursday down 57% at $8.63, though still up more than 100% in four trading days. 

The stock was trading at $13.07 in trading on Friday, up 51%.

As of Friday morning, apparel retailer Express was up 37%, Bed Bath & Beyond was up 10%, clothing maker Naked Brand was up 40% and BlackBerry was up 16%.

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In AMC’s case, investors were already betting on a comeback even before the Reddit-induced activity.

The coronavirus pandemic and subsequent shutdowns have put the likes of AMC in a dark space financially - something that had the company pondering Chapter 11 and a several hedge funds betting it would go take that step.

But AMC shares soared earlier this week after it announced that it had raised $917 million in debt and equity that it said takes bankruptcy "completely off the table."

The capital-raise caught the attention of investors on WallStreetBets, who began buying AMC stock en masse, pushing its share price up more than fourfold. That, in turn, spurred AMC to explore raising even more capital to beef up its cash war chest.

On Wednesday, AMC said it raised an additional $304.8 million by selling shares. And on Thursday, it said Silver Lake and other creditors decided to convert debt holdings to equity in a transaction expected to reduce AMC’s obligations by $600 million.

All told, AMC has raised more than $1.1 billion over the past five days. The company also said it has additional commitment letters for $411 million of incremental debt capital in place through mid-2023.