By Aaron Saldanha and Devik Jain
Shares of AMC Entertainment Holdings surged more than 40% to a fresh record high on Wednesday, extending a breathtaking rally that has seen its stock price more than triple since mid-May.
The theater chain operator’s shares were recently up 47% at $47.25, a fresh record. Its market value has ballooned to more than $19 billion, eclipsing that of video game retailer GameStop, another favorite of retail investors on forums such as Reddit’s WallStreetBets, whose market value recently stood at just over $18 billion.
The gains came a day after hedge fund Mudrick Capital sold a $230 million stake in the company for a profit shortly after acquiring it, saying it believed the stock was overvalued, according to a source.
Investors appeared unfazed by the sale, which some analysts characterized as an attempt to cash in on the retail-driven surge in its stock.
AMC “got the massive amount of money … and the hedge fund probably got a decent profit on that transaction,” said Giacomo Pierantoni, research analyst at Vanda Securities in Singapore.
AMC, whose stock has risen almost 2,000% this year, has been among the biggest gainers from a deluge of interest in so-called meme stocks, fueled in part by a new generation of social media centric small-time traders. The shares went from just over $2 at the end of last year to well over $40 now.
On Wednesday, the company launched an initiative that offered even the smallest investor a free large popcorn if they signed up to a regular newsletter.
“Even if our shareholders now number in the millions … these people are the owners of AMC, and I work for them,” Chief Executive Officer Adam Aron said in a statement.
Shares of GameStop were recently down around 1%. Blackberry, another favorite of retail investors, saw its shares rise around 12%.
Cryptocurrency Dogecoin, another favorite among retail investors, was recently up more than 30%, according to coingecko.com, after Coinbase Global Inc said it will make the currency available to traders on its platform.
Daily trading volumes in AMC in the past week have reached their highest since January’s surge in meme stocks, according to Refinitiv Eikon, while data from Fidelity showed it was the platform’s most traded share.
“The (retail trading) party could go on as long as investors could continue co-acting,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “The problem is, the higher the price goes, the higher is the temptation to take profit and walk away.”