AMC, this summer’s blockbuster stock, warns of plot twists

The movie-theater company’s stock plunged nearly 40% in the morning after it announced plans to sell 11.6 million shares to raise cash, while warning buyers they could lose all their money. But it erased the loss in just a few hours. After the stock sale was complete, it climbed above the record closing price it had set a day earlier, only to sink back to an 8% loss later in the afternoon.

It’s the latest stupefying, nearly unexplainable move for one of the “meme stocks” that have rocked Wall Street this year, Many professional investors say AMC, GameStop and other meme stocks have hit heights untethered to reality and are primed for a steep fall, but that’s not stopping an army of smaller-pocketed and novice investors from holding their ground and promising to take their prices “to the moon.”

For AMC, that so far has meant vaulting its stock price from below $2 early this year to the $50.85 average price that it sold shares for on Thursday. The surge means its total market value has climbed above $30 billion, putting it on par with bigger companies like AutoZone and Old Dominion Freight Line, which unlike AMC are making profits and didn’t have speculation of bankruptcy swirling around them last year after the pandemic shuttered theaters.

In a filing with regulators, AMC couldn’t give a reason for the rise in its stock price that’s tied to its profit prospects, the usual reason for a stock price to move. The company said it didn’t know how long the reasons behind its stock surge will last, while warning investors: “Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.”