Mar 15, 2022 - Economy

AMC hopes to strike gold with mining investment

Illustration of a rainbow made from a film strip, ending in a pot of gold.

Illustration: Shoshana Gordon/Axios

The silver screen doesn’t mean what it used to.

AMC Entertainment — the struggling movie theater chain that got an enormous lift from meme stock investors in 2021 — is investing in a financially strapped gold-and-silver mining company.

  • You heard that right.

Why it matters: AMC is probing the boundaries of the meme stock revolution, testing whether investors will follow the company to the moon … err, to the mines.

  • Investors seemed to like AMC’s investment in Hycroft Mining and its 71,000-acre Hycroft Mine in northern Nevada for $27.9 million in cash. AMC’s stock rose 6.9% on Tuesday.

What they're saying: AMC CEO Adam Aron compared Hycroft today to AMC a year ago:

  • “It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue," Aron said in a statement. "We are confident that our involvement can greatly help it to surmount its challenges — to its benefit, and to ours.”

Our thought bubble: In some ways, the more off-the-wall, the better for meme stock investors. After all, they’re not trading on fundamentals. This is a movement built on a foundation of unconventionality.

  • Call it AMC’s Yukon Cornelius moment. As you may recall, the self-proclaimed “greatest prospector in the North” was similarly obsessed with discovering silver and gold.

Yes, but: There’s a risk of going too far. A review of the famed WallStreetBets message board on Reddit — where retail investors have coordinated their meme stock campaign — turned up more than a few puzzled posters after AMC's announcement.

  • “I think there is a saying...the differences between fiction and non-fiction has to make sense,” one person wrote Tuesday.
  • “Bro what am I reading lol,” another wrote.
  • “This is just a dream, go back to sleep.. oh wait,” someone responded.

The big picture: Diversification is a good thing for any company. And AMC had already taken steps to do so by making plans to sell AMC-branded popcorn at retail establishments.

  • But investing in a movie theater company that is trying to literally strike gold to succeed is nonetheless a startling departure from the ordinary course of business reinvention.
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