Companies with diminishing fundamentals like GameStop (NYSE: GME) have managed to stay afloat thanks to massive support from retail investors.
Perhaps no company is leaning harder into meme stock mania than AMC Entertainment (NYSE: AMC). The movie theatre chain, along with the rest of its industry, was struggling to compete with streaming services even before COVID-19 reared its ugly head. When the pandemic hit, the company was on life support. Perhaps the only thing that kept the company from folding was the willingness of retail investors to prop up the company by buying shares.
AMC does not shy away from relying on retail investors’ support to keep the business running. Indeed, the company now considers garnering the support of retail investors a core competency of their business. The company proved this when it purchased 22% of Hycroft Mining (NASDAQ: HYMC), a gold mining company that has nothing to do with movie theatres but has been popular among meme stock investors; both AMC’s and Hycroft’s share prices rose dramatically after the deal was announced.
AMC CEO Adam Aron commented on the company’s announcement, stating:
While the company has done an admirable job of managing the balance sheet and staying liquid, there is no doubt about what butters its bread.
In a recent interview with CNBC’s David Faber, Aron was asked:
The AMC boss responded:
Shares of AMC are currently changing hands at $25.68 per share, down –12.8% on the day. YTD AMC stock is down -3.17%.
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Disclaimer: Wealthy VC holds does not hold a position in any of the stocks mentioned in this article.