In a New Financial Dynamic, AMC CEO Ditches Plan to Side with Retail Investors
Tim Fries, 07 July 2021
Just a few months ago, AMC CEO Adam Aron leveraged retail traders to lead the company out of its ‘certain’ demise. After billions in raised capital, retail traders—self-proclaimed ‘apes’—have now seemingly signalled the limit to selling shares. The situation illustrates a major shift in finance, for perhaps the first time.
AMC Indebted in More Ways Than One
At the beginning of June, the Tokenist reported that 80% of AMC shares have come into the possession of retail investors. Of those, many share their extensive analysis in various subreddits. What they ultimately show is a reluctance to follow the more sophisticated fundamental analysis of companies, GameStop and AMC Entertainment in particular.
By going against the grain and historic valuations of these retail chains, the activity of retail traders been extremely painful for Wall Street short sellers, relieving them of $12 billion thus far. Hedge funds’ bets against AMC going down have catastrophically failed.
Retail traders have stepped in, finding and sharing evidence of naked short selling. Believing that many such positions are to yet be covered, retail investors have led AMC’s market cap to rise by 3,000% in less than half a year.
As a result, at the onset of business-wiping lockdowns, apes saved AMC from bankruptcy. From December 2020 to January 2021, AMC managed to raise $917 million in debt capital and equity by selling its highly-priced shares. Between April and June, AMC had raised another $1.246 billion via share sales.
