May 15, 2024 - Business

How to survive while losing $7.5 billion

A line chart that displays AMC's net income from Q1 2019 to Q1 2024. The chart shows a significant loss of $2.2 billion in Q1 2020, followed by consistent, if shrinking, losses through Q1 2024.
Data: FactSet; Chart: Axios Visuals

No company has done a better job of taking advantage of its meme-stock status than movie theater chain AMC, a company that, improbably, is still worth billions even after losing $7.5 billion over the past five years.

Why it matters: By issuing enormous quantities of new stock, most recently on Monday, AMC has raised enough cash to keep itself afloat.

By the numbers: The sale of 72 million shares that AMC concluded on Monday brings its total share count up to 296 million. Pre-pandemic, AMC's total number of shares outstanding was just 11.8 million.

  • That's why AMC's share price has fallen by 89% since the end of 2019, even as its market value — boosted by the last couple of days of meme-stock frenzy — has risen by 39%.

Where it stands: AMC stock, which closed at $2.91 on Friday, opened at $11.71 on Tuesday before falling back to close at $6.85. What's going to happen today is anyone's guess.

Follow the money: AMC raised $1.8 billion in 2021 by selling shares into the meme-stock frenzy — enough money to keep paying the bills and avoid bankruptcy.

  • The same playbook seems to be working in 2024, too.

The bottom line: Being a meme stock is sometimes bad for companies. "It can tank acquisition plans and talks, and make it very hard to retain senior people," says Dan Egan, director of behavioral finance at Betterment.

  • In the case of AMC, however, the appetite for the stock from self-described degenerate apes has meant the difference between life and death.
Go deeper