(Bloomberg) -- AMC Entertainment Holdings Inc.'s wild ride shows no sign of stopping in a week that has seen the stock double and the company take advantage by selling shares to cut its huge debts.
The stock traded at $48.51 as of 4:02 a.m. in New York premarket trading, down 5.5% from its last close. That follows a day in which AMC's eye-popping rally was interrupted by plans to sell more equity, with the stock closing down 18%.
It's been quite a week for AMC, a company that's become the king of meme stocks. The stock's surge has enabled the movie-theater chain to sell equity on more than one occasion to shore up a depleted balance sheet that left AMC staring at potential bankruptcy only a few months ago in the face of the pandemic and brutal competition from streaming services.
“Meme stock investors need the share price to be volatile and the stock to make headlines because if the attention disappears, so does their investment,” Joachim Klement, a strategist at Liberum, said by email.
Read more: AMC, Express Mark Golden Age for Retail-Focused Stock Sales
AMC collected $587 million in Thursday's share sale, which came just days after it netted $230.5 million by selling stock to Mudrick Capital Management. The company later said it is asking investors for permission to sell 25 million new shares in 2022.
Chief Executive Officer Adam Aron told shareholders in a statement that AMC may face challenges or “exciting opportunities” post-pandemic and needs “precious shares” to issue if such a situation arises. It also dismissed speculation of a stock split.
Read more: AMC Looks to Issue 25 Million More Shares After 2,300% Rally
The frenzied rally has pushed shares in the money-losing company to improbable levels, giving the business a market capitalization this week that was bigger than half of the listings in the S&P 500 Index.
“Buyers are a symptom of excess of liquidity rather than being fundamentally driven,” said Alberto Tocchio, a portfolio manager at Kairos Partners.
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