Meme stock AMC Entertainment extended gains on Tuesday after raising $230.5 million from Mudrick Capital Management, according to CNBC. The money, raised through sale of 8.5 million shares, will be used to fund acquisitions, upgrade theaters, and cut debt.
AMC surge of 17% in premarket on Tuesday happens even as the stock becomes a favorite among retail traders on Reddit.
AMC doubled last week on speculative activity and is up at least 1,000% year to date, prompting the company to cash in by selling additional shares.
The 8.5 million share sale by AMC represents at most 1.7% of issued share capital and is small relative to its trading volume on a daily basis.
The movie theatre company aims to use the proceeds from the share sale to reduce its $5 billion debt after the pandemic hurt revenues
AMC is expected to capitalize on economic reopening to make returns as consumers return to movie theaters.
AMC, which closed with a $11.8 billion value on Friday, warned its investors of high volatilities in market cap from the current valuation levels.
AMC Entertainment is currently gaining. AMC: NYSE is up 21.29% on premarket.
