AMC Entertainment bounced back on Friday morning, with the nation’s largest cinema chain seeing its stock price rocket 60% higher to $13.91 per share. The huge jump comes after Robinhood, the popular stock trading app, retreated from its decision to block users from trading AMC’s stock — a move that had sent the company’s share price plunging a day earlier.
At its peak on Thursday morning, AMC touched $16 per share before settling into the $14 range about two hours into trading.
It’d already been a crazy week for AMC heading into Friday. The company’s stock was below $5 per share on Monday when it announced it had raised $917 million to fight off bankruptcy. AMC’s shares darted higher soon after, thanks in large part to the support of Wall Street Bets, a popular Reddit forum that has been targeting companies like AMC that have been heavily shorted, or bet against, by hedge funds; GameStop, which has seen its share price run from $20 to north of $300 in a matter of weeks, is the best example of a heavily-shorted company becoming a WSB darling.
Behind its cash infusion and Reddit momentum, AMC surged earlier this week, climbing to nearly $20 per share by the time markets closed on Wednesday. That Reddit momentum also carried over to Twitter, where users had been using the hashtag #SaveAMC as a rallying cry. AMC’s run was halted on Thursday, though, after Robinhood said it was blocking users from buying the shares of the company and several other “Reddit stocks,” including GameStop and BlackBerry.
RobinHood CEO Vlad Tenev, in an interview with CNBC on Thursday night, said the app restricted trading “in order to protect the firm and protect our customers.” That explanation did little to satiate AMC shareholders, though, who were irate that the app was only allowing users to sell shares of the company on Thursday; the phrase “F— Robinhood” quickly gained traction on Wall Street Bets in the aftermath.
On Friday, after raising an emergency $1 billion on Thursday night, Robinhood reinstated “limited” AMC and GameStop buying.
It’s unclear how AMC’s business plan is impacted by the recent stock run. The cinema chain’s finances have been decimated by the COVID-19 pandemic and the company still faces a barren box office slate as it moves into 2021. Reuters reported on Thursday it was considering raising more capital, and CNBC’s Jim Cramer on Friday called on AMC CEO Adam Aron to “sell a billion dollars worth” of stock to “fix the balance sheet until covid is tamed.” AMC has more than $5 billion in debt, even after Silver Lake Group LLC elected to convert $600 million in debt into equity on Thursday.
For more details on how GameStop and AMC are part of a “David versus Goliath” battle between Reddit true believers and hedge funds betting against their success, click here.