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Expand chart
Data: EODData; Chart: Will Chase/Axios

AMC's share price reached an all-time high last week, thanks to retail investors looking to stick it to institutional shareholders.

Why it matters: The theater chain's wild ride on Wall Street points to the power of "meme stocks" in boosting distressed assets even when markets are volatile.

  • Retail investors have rallied around AMC online via forums like Reddit — a phenomenon smilier to what happened to GameStop in January.
  • AMC was the most-traded stock in May.

How it works: Institutional investors borrowed money to buy shares of AMC, expecting the stock price to fall, with the hope of buying the stock back at a much lower price.

  • These "short-sellers" have lost over $1 billion on AMC's stock over roughly the past week, per CNBC, thanks to retail investors buying up the stock.
  • AMC's share price has soared since the beginning of the year, jumping from roughly $2 in January to $26 by Memorial Day weekend. It peaked last week at $36.72.

Yes, but: Even though AMC is expected to partially recover as theaters begin to reopen, the company's financials are still in disarray.

  • While the company has records levels of liquidity, that cash can only keep the theater chain afloat for so long without enough steady revenues coming in.
  • AMC isn't expected to generate positive cash flow for at least the rest of the year. It narrowly avoided bankruptcy last year thanks to a $917 million cash injection.
  • The company said months prior that without that money, its cash-burn rate would've driven it to bankruptcy by year's-end. AMC has tried to keep as many theaters open as possible, despite COVID-19 capacity restrictions.

The big picture: Many analysts don't expect theater revenues to ever fully revert to pre-pandemic levels, although it saw a healthy recovery the past few days.

  • The box office brought in an estimated $100 million over the holiday weekend, compared to roughly $230 million in 2019.
  • On its first quarter earnings call three weeks ago, AMC CEO Adam Aron said the company has "taken share" from other major theater chains that have stayed closed or those who have gone bankrupt, among other factors.
  • It announced $230.5 million in new fundraising via an equity sale on Tuesday to buy new leases and upgrade existing theaters, Variety reports.

What to watch: Some analysts say it's still likely that the company goes bankrupt this year.

  • "They will trip debt covenants if attendance does not get back to 90% of pre pandemic levels," LightShed Partners' Rich Greenfield told Axios.

Editor's note: This article has been updated to add the new fundraising numbers.

Go deeper

The stock market has gotten cheaper over the past year

Data: FactSet; Chart: Axios Visuals

A widely followed valuation metric suggests stocks have been getting cheaper over the past year, even as prices have surged to new highs.

Why it matters: When stocks rise and company market caps balloon, it’s tempting to think that the shares must eventually fall in order to get to more reasonable levels.

The post-pandemic economy has already arrived

Illustration: Aïda Amer/Axios

With the recession officially ending in April 2020, we're now 16 months into the recovery and the contours of the post-pandemic economy have taken shape.

Why it matters: While the coronavirus continues to infect roughly 100,000 new Americans every day, it's no longer driving the course of the economy.

WHO warns against travel bans on southern African countries

Matshidiso Moeti, World Health Organization regional director for Africa. Photo: Sylvain Gaboury/Patrick McMullan via Getty Images

The World Health Organization called on countries Sunday to not impose travel bans on southern African nations amid concerns over the new COVID-19 Omicron variant.

Why it matters: The U.S. and countries in Europe and the Asia-Pacific announced travel restrictions in response to Omicron, which was first detected in South Africa. It's since spread to several European countries, Canada, Australia and Hong Kong. The WHO noted in a statement that only two southern African nations have detected the new variant.