AMC Stock Closes at a Record Low as Meme Music Fades

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A meme-merchant can be useful. Raising money through stock salesBut the hype still hasn’t done enough for the companies’ bottom lines. That’s obvious. Game stops New income report and latest activities

AMC Entertainment
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Earlier this week, it announced plans to sell up to 40 million shares at market value.

After closing at a new record Wednesday, shares of AMC Entertainment (ticker: AMC ) neared another milestone Thursday, with shares down 5.8% to $8.12. In the year It is down 98% from its record high of $339.05 in June 2021.

Shares of GameStop ( GME ) fell in early Thursday morning trading, but ended up 0.8%. The company reported an adjusted quarterly net loss of $9 million on Wednesday.

Both companies During the 2021 classes, retail investors such as retail investors and some hedge funds saw an increase in shares in the company’s shares that were heavily shorted. The incident helped the company garner cult-like interest from certain corners of Reddit and Twitter, with users speculating that shares could rise again. Sometimes they do even less. Although GameStop stock is still higher than pre-meme stock levels, any gains are generally short-lived.

AMC’s operational struggles were closely tied to the epidemic. The Covid-19 shutdown and slow return to theaters weighed on the company’s profits. But accumulating sales — after the meme rally — helped it weather the storm. Although the company hit a ceiling on how many shares it could sell to shareholders who voted to expand the authorized share capital and convert the units into common stock, it turned around by offering preferred equity units to shareholders. The move will allow AMC to sell more shares at a better price. Stock sales are generally considered negative because they dilute existing shareholders.

Thanks to its meme status, AMC needed more than a popular Taylor Swift concert film and a new line of popcorn to justify the level of interest and investment it received. The company is expected to report a loss of $386 million for the full year 2023, according to FactSet. Analysts expect a loss of $285 million for 2024 and $209 million for 2025.

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GameStop, meanwhile, faces an uncertain future before becoming a meme stock. The company cited executive changes and a shift to digital goods in the games industry as threats to GameStop’s survival. GameStop is facing similar odds, including a CEO ouster earlier this year, although its balance sheet has improved with the help of a stock sale in the market since shares rose in 2021.

“Without a clear strategy to replace lost game sales, we think the company will increase its losses to $100 million a year, then $200 million, $300 million, and so on,” a Wedbush analyst said. Michael Pachter. “The loss of Playstop is outside the 12-month window we use for our price target, but we expect the company’s decline later this decade.”

The company’s foray into the world of crypto and fiat tokens has been disappointing, and a wave of executives hired after January 2021 have already resigned or been fired.

The cash from the stock sales gave both GameStop and AMC a second lease on life and new options on how to proceed, but it’s unclear whether those options are right for the valuations.

Write to Connor Smith at [email protected]