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Movie theater giant AMC is currently experiencing this demand surge following investment in a gold & silver mining firm.
AMC Entertainment Holdings (NYSE: AMC) stock is on the rise, surging further to end Wednesday’s trading session 13.6% higher. Wednesday’s close means the movie theater giant stock has now added approximately 30% in two days.
For the most part, AMC stock underperformed throughout much of last year. However, shares of the movie theater chain began to rally following a key business move. A few days ago, AMC announced that it had bought into cash-strapped gold and silver mining outfit Hycroft Mining. The world’s largest movie theater chain said that it bought a 22% stake in the company for $27.9 million. AMC further explained that a primary motivating factor in the deal was the need to diversify and help other businesses in distress. According to CEO Adam Aron, AMC has had previous problems with insolvency. For this reason, the company decided to help other firms experiencing the same problem.
AMC’s purchase of Hycroft’s shares does nothing to build up its cinema operations. However, analysts credit the movie theater giant’s deal with Hycroft as a prudent one, given the relatively low risk/high reward investment that characterizes it. With approximately $28 million, AMC is now privy to $1.8 billion worth of liquidity through the mining company. This also means that any potential setback from a Hycroft collapse, from AMC’s perspective, pales in comparison to potential rewards for propping up the mining platform.
Alongside AMC, GameStop Stock Also on the Rise
Besides AMC, another ‘meme’ stock to hit a substantial upswing recently is that of video gaming merchandise retailer GameStop (NYSE: GME). On Wednesday, the video game and consumer electronics retail giant surged 14.5%. GameStop stock’s recent rally came about after company chairman Ryan Cohen’s key disclosure. According to Cohen, his investment company bought 100,000 shares of GameStop, extending the 30% rally from Tuesday. However, it is also worth noting that the aforementioned 30% rally itself had no apparent catalyst.
Weighing in on GameStop and AMC stock, senior portfolio strategist at Ingalls & Snyder in New York Tim Ghriskey said:
“This has probably occurred because we’re in a weak market environment, likely investment managers who short are looking for opportunities and they’ve gone back to those historically tried and true names.”
Furthermore, Ghriskey also added about the top two most trending stocks on the retail investor-focused stocktwits.com on Wednesday:
“That provides an opportunity for these investors to try to create a short squeeze, it causes a frenzy in the shorting community and it can close a hedge fund.”
Founded in 1920 and headquartered in Leawood, Kansas, AMC is the largest movie theater chain in the world. The company has 2,866 screens in 358 theaters in Europe and 7,967 screens in 620 theaters in the United States. AMC accepts a slew of digital currencies, including Bitcoin (BTC), Ethereum (ETH), and recently-added Dogecoin (DOGE) for movie tickets.