A joke where everyone is making fun of everyone in grand & crazy pump-and-dump schemes. But I can’t blame AMC. I blame the Fed.
AMC Entertainment Holdings – whose shares became the incredibly spiking #1 the-zoo-has-gone-nuts meme stock in recent days, multiplying by a factor of 6 in seven trading days, before plunging today – announced in an SEC filing early this morning that would try to sell 11.55 million shares to retail investors, with B. Riley Securities and Citigroup Global Markets as sales agents.
Let the cold-calling begin. AMC will pay the sales agents “up to 2.5% of gross sales” in commissions plus reimburse them for certain expenses. The share sales will be conducted whenever, in bits and pieces, via this “at-the-market” offering.
The fun thing about the updated prospectus is the explicit acknowledgement that the zoo has gone nuts, that the insane movements of AMC’s shares are prove of it, and that investors should not touch this thing with a 10-foot pole.
This is a class-act CYA, much needed during the securities lawsuits that are likely to follow. It will be able to tell stiffed plaintiffs: “We told you so.”
But it also shows that AMC is counting on these traders to not read the warning, and to not heed it if they read it. AMC is counting on these traders to instead buy those shares, with those traders relying on their Reddit crowd to bail them out of those shares later at a much higher price – the social-media-organized pump and dump.
With a palpable sense of astonishment, AMC points out the crazy share price movements that it is now going to take advantage of:
“For example, during 2021 to date, the market price of our Class A common stock has fluctuated from an intra-day low of $1.91 per share on January 5, 2021 to an intra-day high on the NYSE of $72.62 on June 2, 2021 and the last reported sale price of our Class A common stock on the NYSE on June 2, 2021, was $62.55 per share,” it says.