REUTERS/Mario Anzuoni
- AMC Entertainment soared 31% on Monday, helping revitalize a strong rally in meme-stocks.
- The surge in AMC came after its CEO gave interviews indicating his ambition to make more strategic deals like it did with Hycroft Mining.
- Hycroft soared more than 50% on Monday after it said it raised $139 million in cash by selling stock to investors.
AMC Entertainment stock soared as much as 31% on Monday after its CEO said the company was planning more strategic deals to capitalize on the more than $1 billion it raised in-part from retail investors last year.
The rally on Monday helped ignite a broader rally in meme-stocks, with GameStop up more than 10% and shares of Hycroft Mining up more than 50%. Hycroft received a strategic investment from AMC earlier this month worth about $28 million in exchange for a 22% equity stake.
In an interview with Reuters , CEO Adam Aron said his company’s experience in navigating the capital markets after being left for dead by investors amid the COVID-19 pandemic is something they can lend to other companies that are struggling with a weak balance sheet.
“While the Hycroft investment is pretty far from home, it does rely on a core competency of our company to understand balance sheets, and raising cash, and solving liquidity problems,” Aron told Reuters.
In a Monday interview with CNBC, David Faber asked Aron, “Is that the new core competence of AMC, to sort of use these memesters that you have to help turnaround the fortunes of a company because they’re willing to put money behind it?”
“I think I have to say the answer is yes, and we proved it,” Aron responded.
So far, Aron’s deal with Hycroft has worked, on paper at least. AMC purchased Hycroft shares at $1.07, and after the deal was announced the stock surged to a high of $2.65 before pairing its gains. Hycroft has since raised $139 million by selling stock to investors in a bid to strengthen its balance sheet and grow operations at its gold and silver mine.
Shares of Hycroft surged more than 50% on Monday to a high of $2.08, representing an overall gain of 95% for AMC’s initial investment.
“I’d like to think there will be more third-party external M&A announcements going forward…Transformational M&A is mandatory. Our shareholder base has given us capital to deploy with the clear expectation that we are… going to do exciting things with the money they entrusted to us” Aron told Reuters.
Despite making a deal in a sector completely unrelated to the movie theater business, Aron is still focused on its namesake business.
In an interview with CNBC on Monday, Aron said a strong movie slate for 2022, including Top Gun, Jurassic World, and Avatar 2 should continue to drive a rebound in its core business, and that the potential for streaming companies to show its movies in traditional movie theaters represents an untapped opportunity.
“We’ve been engaged with the streamers, especially Apple, Amazon, and Netflix for years trying to convince them to show their movies in our theaters as well as stream them. If we can convince them accordingly, I think they will even be more successful than they are now, and AMC as well,” Aron said.
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