- June 2, 2021
- Posted by: Stratford Team
- Category: Markets
- Mudrick Capital has sold its entire stake in AMC Entertainment, Bloomberg reported on Tuesday.
- News of the sale came on the same day AMC disclosed raising $230.5 million from Mudrick Capital’s purchase of 8.5 million shares.
- AMC said the funding would allow it would go “on the offense again.”
- See more stories on Insider’s business page.
Mudrick Capital has sold off its entire stake in AMC Entertainment at a profit, Bloomberg reported on Tuesday, with the news arriving on the same day the investment firm’s purchase of $230.5 million AMC shares was disclosed.
Mudrick disposed of the stake after concluding AMC’s stock is overvalued, propelled higher by a wave of enthusiasm among day traders, Bloomberg reported, citing an unnamed person with knowledge of the matter.
AMC shares held to hefty gains following the mid-afternoon report, up by 19% at $31.10.
Earlier Tuesday, AMC said it raised $230.5 million in an agreement under which Mudrick would buy 8.5 million shares for $27.12 apiece. The price was a premium to the stock’s close of $26.12 on Friday. AMC rose by as much as 28% to $33.53 following the statement.
Last week, AMC surged 116% as retail traders active on Reddit and Twitter banded together to squeeze short positions. The rally was originally catalyzed by major shareholder Dalian Wanda Group selling almost all of the remainder of its stake in the company. Redditors responded by cheering the newly available shares and making their newfound weight felt in the market.
AMC has been in recovery mode after the COVID-19 pandemic forced it to temporarily close locations worldwide to help curb the spread of the disease. It said Tuesday the funding from Mudrick would go in part toward potential acquisitions and that it was discussing a potential deal for Arclight Cinemas and Pacific Theatres. Those chains were shut down last month by Decurion Corp. which decided to close its roughly 300 movie houses.
AMC led a broader rally in so-called meme stocks last week that included GameStop and Virgin Galactic. Short-sellers wound up losing nearly $3 billion betting against those three stocks alone, according to financial-analysis firm Ortex.
“With our increased liquidity, an increasingly vaccinated population and the imminent release of blockbuster new movie titles, it is time for AMC to go on the offense again,” AMC said in its early Tuesday statement.