AMC Entertainment shares were down by a third today after the company took advantage of a record stock price with its second share issue in three days, while saying it did not know how long its stellar run would last and warning investors of the risks involved.
Shares of the largest cinema chain in the world traded 33.4% lower today at $41.10 after the company said it agreed to sell up to 11.55 million of its shares from time to time in an at-the-market program.
A wave of buying from retail investors had helped AMC's share price nearly double to a record close of $62.55 in the prior session.
"Our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last," the cinema chain operator said in a statement.
A number of Wall Street analysts have said AMC is already overvalued and many institutional traders have said they are steering clear of the stock, a popular destination for retail traders congregating on Reddit's WallStreetBets and other forums.
"Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment," AMC said, echoing a warning from regulators earlier this year on the potential pitfalls of such stocks.
Wednesday's record price was 30 times the level AMC traded at the end of 2020 and came a day after it issued 8.5 million shares to Mudrick Capital, which the hedge fund flipped at a profit.
