AMC Entertainment (NYSE:AMC) Takes Advantage of Meme Stock Mania Again

The meme stock craze is in full swing again, and AMC Entertainment (NYSE:AMC), one of the original meme stocks, is making the most of the rally. This week, the film exhibitor completed an at-the-market (ATM) equity offering of 72.5 million shares at $3.45 per share. The move helped the company raise $250 million in new capital.

capital increase

But this is not the first suitable share sale by AMC. Over the past four years, the financially troubled film chain has made at least five equity offerings, raising millions of dollars. In September, it had raised about $325.5 million by selling about 40 million shares.

The steady stream of capital raising has meant dilution for existing investors in AMCs, but it has not led to any reduction in retail investors’ interest in the stock. And this is where the story becomes interesting.

Another meme comes amid stock rally

The recent return of “Roaring Kitty” (who has only posted a few memes thus far to show renewed interest in the action) after a nearly three-year hiatus, and the possibility of a short squeeze, is sure to spark a meme frenzy. There are enough factors for a name like AMC. According to FINVIZShort interest in AMC is currently around 18.8%. Our data dive on TipRanks shows that retail investors hold about 6.72% of AMC. A small float could mean wild swings in AMC’s share price (as has happened in the past). As a result, AMC shares have surged nearly 129% over the past five days and are already up more than 20% in the premarket session today.

but caution is necessary

Despite the hype, AMC still remains a risky bet. Despite increasing revenues in the last four years, the company continues to suffer annual losses. Last week, the company reported a decline in attendance at its theaters for the first quarter and warned of a weak second quarter due to a lower number of film releases.

What is the price prediction for AMC stock?

It’s not surprising that analysts have given the stock a Moderate Sell consensus rating, with an average AMC price target of $4.68. This means the stock has the potential to decline by more than 30%.

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