AMC Entertainment Up 26% as It Avoids Bankruptcy During Pandemic, and Two More Numbers to Know
Three numbers to start your day:
Melvin Capital Management Raises $2.75 Billion
The funds were raised from Citadel and Point 72 Asset Management.
The Wall Street Journal reported that the fund was hurt by bets against companies like GameStop, which is up 308% for the year. As of Friday, Melvin was reportedly down 30% for 2021.
Now, the fund is getting a hand from a couple of its peers. Founder Gabe Plotkin will get a cash infusion from Steven Cohen’s Point 72, where Plotkin was a top portfolio manager, and Citadel. They will be investing in Melvin’s fund and their stakes will include non-controlling revenue shares in the firm, according to the Journal.
Retailer Express Rallies 131% on Monday
GameStop isn’t the only heavily-shorted stock that has been on a tear. Express, BlackBerry, and Bed Bath & Beyond all swung wildly on Monday, and are now up 356%, 172%, and 73% for the year, respectively.
Wall Street analysts are attributing the seemingly inexplicable rallies to Reddit message boards where individual investors congregate to discuss their trades — a pastime that has become more popular as people are stuck at home during the pandemic.
There could be fundamental drivers, of course—but it is difficult to argue that those developments would deserve triple-digit percentage gains. So investors may want to be careful.
AMC Entertainment Stock Rallies 26% After Announcement it Will Not File for Bankruptcy
A restructuring is “completely off the table,” AMC CEO Adam Aron said on Monday. The company said it had raised plenty of cash since mid-December, with $411 million of extra debt financing and $506 million of stock and bond sales. That is on top of the $1 billion it had raised between April and November of last year, which didn’t end up being enough to offset the costs of long-term shutdowns during the pandemic.
All of this means investors are willing to bet that movie-theater chains will survive the pandemic. But the industry could still face some more trouble before business gets better, and investors are aware of that, too. AMC’s stock is down 34% over the past 12 months.
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Write to Alexandra Scaggs at [email protected]
