On another volatile trading day, the AMC stock price took heavy losses on the news of the theater companys’ $587 million capital raise.
AMC ended the day at $51.32 (-27.025)
AMC Entertainment Holdings Inc (NYSE: AMC) has certainly lived up to its name. The latest installment of its short-squeeze saga is proving just as entertaining as the prequel.
Over the last two trading days, volatility in the AMC stock price has been off the charts.
Wednesday’s +126% rally was followed by a -45% decline which led to an +80% rally, followed by a -30% drop. In a bid to dampen the volatility, trading was subsequently halted several times during the session.
The price swings yesterday came as the market grappled for direction in the wake of the latest stock offering. The
A statement filed with the Securities and Exchange Commission (SEC) outlined AMCs’ plan to increase its share capital by 25 million shares effective June 2022.
However, later in the day, the company announced the stock offering had taken place. 11,55 million shares were sold at an average price of $50.85, just below today’s official close.
CEO and President Adam Aron said: “Bringing in an additional $587.4 million of new equity on top of the $658.5 million already raised this quarter results in a total equity raise in the second quarter of $1.246 billion”.
How the market reacts today following yesterday’s announcement remains to be seen. Bulls will cheer the fact the company is using the recent price rise to improve its financial standing. Whilst the bears will point to the almost $10 billion outstanding debt that remains.
What is almost certain is that the volatility is likely to continue for a while. Below the market, the price may find some support between $36.00 and $39.00. Notably, yesterday’s initial reaction lower reversed from $37.67.
As I predicted in my report released ahead of yesterday’s open, the $69-73.00 range is important. The large accumulation of call options in this area will provide a magnet as the price increases:
Whilst technical analysis may be viewed as little help in market conditions like this. The support and resistance areas will give some indication of market sentiment.
A break above $73.00 would suggest the bulls are still firmly in charge of the price. Alternatively, a close below $30.00 could signal the end credits are about to start rolling.
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