Topline
As the company starts to embrace and capitalize on its recent Reddit-fueled stock surge, a slew of executives and board members at AMC Entertainment sold large chunks of stock this month for the first time in years after an army of individual investors drove up prices to meteoric levels.
AMC says more than 80% of its shares are held by a “broad base of retail investors,” who each hold … [+]
Key Facts
According to regulatory filings released through Wednesday, 10 AMC executives and board members have sold nearly 239,000 shares for roughly $9.5 million this month—securing a nearly 20-fold return compared to the less than $500,000 those shares were worth on the first trading of the year.
Most of the shares, worth about $4.7 million at the time, were sold last Thursday, the day after AMC shares reached an all-time closing high of $62.55—3,000% more than the closing price of $2.01 on the first trading day of the year and 40% more than current prices.
The rest of the sales occurred this week and totaled $4.8 million.
Sellers include independent board members, senior vice presidents and C-suite executives, but notably, CEO Adam Aron is not among them.
Aron’s last documented transaction was a gift of 500,000 shares—currently worth about $21.5 million—to his two adult sons, who each received 250,000 shares, in March.
AMC did not immediately respond to a Forbes request for comment.
Big Number
4.1 million. That’s how many individual shareholders AMC has, the firm disclosed in a Tuesday filing. AMC says more than 80% of its shares are held by a “broad base of retail investors,” who each hold an average of 120 shares—worth roughly $5,300 Thursday.
Tangent
AMC reached its record high last week on the day it touted an “extraordinary base of enthusiastic and passionate individual shareholders.” One day later, the company raised $587 million from investors by selling nearly 11.6 million shares at an average price of $50.85. The firm simultaneously cautioned against the investment, saying that “under the circumstances,” people should only buy into the stock if they are “prepared to incur the risk of losing all or a substantial portion” of their investment. Prices are down about 15% since but still up nearly 2,000% this year.
Key Background
The recent rise in AMC and other so-called meme stocks follows a similar surge in January, when activist investors perched on Reddit’s r/WallStreetBets board pumped struggling firms like AMC, GameStop and BlackBerry in a bid to hurt short-sellers—fueling what’s known as a short squeeze. Meme stocks have been incredibly volatile this year, with most—including AMC—skyrocketing in late January before crashing weeks later once institutional investors piled out of their short bets. There’s been one high-profile AMC exit during the retail trading mania. Former controlling shareholder Dalian Wanda Group, the investment firm helmed by Chinese billionaire Wang Jianlin, nearly closed out its AMC stake at the end of last month. It sold about $430 million in shares over a one-week period—nine years after taking control of the company in a $2.6 billion deal.
What To Watch For
AMC’s annual shareholder meeting will be held on July 29, with its next earnings release expected to come in early August. Either of those events could shed some light on how AMC plans to invest its recently raised cash. The firm’s already teased plans to acquire additional movie theaters, but specific locations haven’t been shared.
Further Reading
AMC Entertainment Raises $587 Million After Skyrocketing 2,900%, But Warns Investors Could Lose It All (Forbes)
AMC Extends Massive Meme Stock Rally After CEO Touts $230 Million Raise And ‘Aggressive’ Growth Strategy (Forbes)
Brokerage Billionaire Warns Against Shorting AMC, Meme Stocks: Prices Could Hit ‘Unimaginable Highs’ (Forbes)