AMC stock doubles amid meme craze, completes $250 million share sale

AMC raises $250 million through equity offering as meme trade boosts GameStop, shares surge 78%. Analysts cautious on long-term outlook.

The struggling theater chain recently completed an equity offering, raising a significant amount of new capital. This move came amidst a resurgence of meme stock trading, driven in part by the return of Keith Gill, also known as "Roaring Kitty," whose bullish stance on GameStop sparked a rally in meme stocks in 2021.

Following Gill's resurgence, shares of GameStop and AMC surged, with AMC stock rising over 78% and GameStop rallying nearly 75% by the market close. Both stocks continued to climb, with AMC shares trading as high as $10.70 by the following morning.

The equity offering saw AMC sell 72.5 million shares at $3.45 per share, raising $250 million in total. This influx of capital comes at a critical time for the company, which has been struggling since the onset of the pandemic as moviegoers slowly return to theaters.

In its most recent quarter, AMC reported revenue of $951.4 million, slightly down from the previous year. Despite this, the company's losses improved, with earnings per share narrowing to $0.62 from $1.71 in the same quarter a year prior.

Analysts, such as Wedbush's Alicia Reese, have noted that AMC's focus moving forward will be on reducing its $4.6 billion debt burden. Reese highlighted the potential for revenue growth from AMC's European circuit through theater upgrades, but noted that this may be put on hold as the company works to strengthen its balance sheet over the next two years.

Overall, the completion of the equity offering marks a significant milestone for AMC as it navigates the challenges of the post-pandemic landscape. The influx of capital will provide the company with much-needed resources to support its recovery efforts and drive future growth.