GME - Not All Meme Stocks Are The Same: AMC Entertainment Is One To Avoid

2024-05-17 16:05:17 ET

Summary

• AMC Entertainment's stock spiked to more than $10 from $3.55 after meme traders rallied around the name, but has since given back roughly 50% of the peak.
• CEO Adam Aron cashed in on the meme traders' exuberance by selling almost 100 million shares, raising millions for the company.
• Further dilution is very possible if meme traders continue to provide any meaningful price bounce support in coming days, in my opinion.
• AMC's underlying business model, which includes a self-defeating revenue share system with studios, is the main cause of its losses and needs to be addressed for a fundamental rebound.
• Avoid AMC Entertainment unless there's a complete strategic change.

Well, the memes are at it again. After closing last week below $3, AMC Entertainment Holdings, Inc. ( AMC ) opened at $3.55 on Monday and spiked to more than $10 by opening on Tuesday. It has since given back roughly 50% of that peak on the news , which is a bit more complicated than just a capital raise as we will discuss, that CEO Adam Aron has (again) cashed in on the meme traders' exuberance by selling new shares of stock - roughly 72.5 million shares this time, good enough for $250 million to be added to the company balance sheet before fees....

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