Don’t put stock—literally—in the “pure hype” of this week’s meme stock rally of AMC Entertainment Holdings Inc. shares, which Trading.biz analyst Cory Mitchell said is driven by “pure hype.”
AMC shares had soared to 78.4% at the close of trading on Monday, then again by 32% on Tuesday, though it did drop 23.8% on Wednesday. Other meme stocks such as GameStop Corp. also saw a boost in share prices earlier this week.
The movie theatre chain has lost money for several years and continues to do so, Mitchell said. “People are only buying because they believe more people will come in and buy after them, so they can sell at a higher price to those new buyers,” he added. “The stock may go higher in the short term, but unless the company has a massive turnaround, whatever rally develops will be followed by swift and severe selling.”
AMC said Monday that it had closed out a $250 million at-the-market offering of equity capital, and then announced on Tuesday that it will issue 23.3 million shares in a debt-for-equity swap for $163.9 million in bonds. Overall, the chain’s share price is down 14.9% in 2024.
