This Scenario Could Cause AMC's Earnings to Jump Sustainably
These days, AMC Entertainment Holdings (NYSE: AMC) is known more for being a meme stock than any other of its attributes. Retail traders posting or reading posts on Reddit trading forums apparently chose to buy and hold the stock to counter hedge funds betting that AMC's stock price would go down in a move commonly referred to as a short squeeze. The Reddit crowd is winning the battle so far. AMC's stock price is up roughly 2,450% year to date.
AMC's management has been smart to take this pricing opportunity and sold new shares at the elevated pricing to help raise much-needed funds. This had already helped it survive the most acute phase of the pandemic when all its theaters were closed to viewers, and the company was bleeding cash. It plans to use some of the new funds to help pay down the debt it accumulated during the pandemic.
But this battle between Reddit traders and hedge funds is creating another opportunity for AMC -- to raise enough cash to boost earnings in the long run.
Source Fool.com
