Last year, COVID forced AMC to raise capital to stay afloat after tick sales crashed by more 80%. After several false starts due to COVID-19 cases increasing last Summer throughout the U.S., AMC theaters opened up again on Aug. 2oth. AMC promoted the reopening as "Movies in 2020 at 1920 Prices." But reality quickly settled in as the movie traffic failed to materialize.
That’s when the company said its existing cash resources would be "largely depleted" by the end of this year or early next year because of the "reduced movie slate for the fourth quarter," as well as "the absence of significant increases in attendance from current levels."
The company says they either need to sell more tickets or find new ways to borrow money.
According to a report in the Daily Mail in early 2020, Amazon was considering buying the movie theater chain. Amazon has long been active in video streaming and also has a strong business in connected TV devices with products like Amazon Fire TV and Fire TV Stick.
The dynamics surrounding AMC was one of the reasons why its stock price was heavily shorted. I was actually short the stock at one point.
However, during the Reddit frenzy, AMC Entertainment Holdings raised over $300 million by selling shares at an avg. price of $4.81. However, had they waited a couple of hours later as shares approached $20, they would have raised $1.26 billion instead. The money they raised just might have gotten to the point where they can get back on their feet as their movie theaters start to reopen.
Video Source: https://www.youtube.com/c/CNBCtelevision/videos
