Share sales that target retail traders are reaching new heights of popularity with the rise of money-hungry meme stocks like AMC Entertainment Holdings Inc.
AMC slumped as much as 40% on Thursday after announcing plans for another stock offering this week. This time, it’s an at-the-market offering, which deploys the historically unusual strategy of selling shares directly into the open market – where retail traders had driven a 2,850% runup this year through Wednesday’s close.
Express Inc., another day-trader favorite, fell as much as 26% on Thursday after announcing an at-the-market offering of its own. Traditional stock offerings are sold almost entirely to institutional investors, but the rise of retail trading is leading corporate issuers like these to cater their financings to whoever the buyers are.
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Moviegoers check in at AMC movie theater amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., March 5, 2021. REUTERS/Jeenah Moon
The meteoric rise in shares of AMC Entertainment Holdings Inc (AMC.N) may have diminished an important options market force that helped fuel its recent gains, analysts said.
Bullish options bets that would profit if AMCâs shares traded in the $40 to $70 range drew a huge influx of buying in recent days, with millions of contracts changing hands as the movie theater chainâs stock price rose by as much as 178% this week.