UPDATED: Shares of beleaguered movie theater chain AMC Entertainment soared on Wednesday, driven by a frenzied rescue effort by users on Reddit, TikTok and other social media platforms to buy the stock.
AMC shares were up nearly 300% as the market opened Wednesday, with shares trading at $20.31 per share. That’s the highest the stock has traded since September 2018. AMC’s stock has fluctuated amid the coronavirus pandemic and the subsequent closure of movie theaters. Last October, the stock was trading at $4.13 a share. Nearly a month ago, shares plunged to $2.01.
The frenetic activity around AMC shares triggered no less than six “circuit-breaker” halts that stop trading for 15 minutes at a time in an effort to calm extraordinary trading volumes. But the largest equities markets were no match for determined online communities who seemed motivated by trying to outmaneuver hedge funds and other short-sellers who are perceived to be vultures willing to destroy the tradition of movie-going to profit from AMC’s woes.
AMC Entertainment shares closed out trading Wednesday up 301%, to $19.90. In after-hours trading, however, the exhibition chain was coming back down to earth, giving up at least 20% of its windfall.
AMC’s surging stock price stems from the online community on Reddit r/Wallstreetbets, where users share stock tips and option trading. The hashtag “#SaveAMC” was the top trending topic on Twitter and other social media platforms early Wednesday. The Reddit board, which has 2.8 million members, has also been promoting video-game retailer GameStop, causing the stock to more than quadruple in January for no apparent reason.
Reddit co-founder Alexis Ohanian took to Twitter on Wednesday to describe the phenomenon as ” the public doing what they feel has been done to them by institutions.”
💡 @andrewrsorkin you framed it right – that's the sentiment, the public doing what they feel has been done to them by institutions. This is an echo of what we've seen social media enable the public to challenge institutions for the last decade.
— Alexis Ohanian Sr. 7️⃣7️⃣6️⃣ (@alexisohanian) January 27, 2021
“This is an echo of what we’ve seen social media enable the public to challenge institutions for the last decade,” Ohanian wrote. “And it’s a perfect storm at a time when lots of people are hurting, interest rates are so low, inescapable student loan debts loom, and every major institution has caught Ls during a /global pandemic/ over the last year. This is something to believe in.”
AMC, which has been teetering on the brink of bankruptcy, announced earlier this week that it secured $917 million in financing, enough to get the struggling cinema chain through the ongoing coronavirus crisis. “Imminent bankruptcy is completely off the table,” AMC’s CEO Adam Aron told Variety. “We believe we have the runway we need to get through this pandemic.”