What occurred
Shares of AMC Leisure (NYSE:AMC) climbed 12.2% throughout common market hours on Tuesday earlier than hovering a further 50% in after-hours buying and selling.
So what
AMC’s features got here after the movie show chain — which has struggled with coronavirus-related closures and sagging attendance in the course of the pandemic — mentioned on Monday it had raised a complete of $917 million in financing. CEO Adam Aron mentioned the money would enable AMC to fund its operations “deep into 2021.”
AMC Leisure’s latest features accelerated late on Tuesday. Picture supply: Getty Pictures.
A short squeeze can be seemingly contributing to the steep rise in AMC’s share value. Many particular person merchants have been coordinating their inventory purchases on websites like Reddit in an try to stress quick sellers. To exit their positions, short-sellers should purchase again the shares they offered quick — a dynamic that may drive the value of a closely shorted inventory, equivalent to AMC Leisure, even larger.
Now what
Though AMC is now on steadier floor after bolstering its stability sheet, the corporate remains to be burning by way of money. Till folks really feel protected sufficient to return to crowded film theaters en masse, AMC’s losses will proceed to mount. Thus, regardless of its latest features, the beleaguered theatre chain stays a high-risk funding.
