AMC Entertainment is about to embark on a bit of empire building given how CEO Adam Aron was received when he invested in a gold and silver miner. He told the news agency that he has a war chest of over $1 billion and wants to find other deals like the one he just completed.
His loyal, small-investor fan base gobbled up the news, and AMC's shares are soaring over 40% higher heading into Monday's close. AMC's self-professed apes have been looking for the "mother of all short squeezes" if the rally happens to launch it.
The image is from the same source.
It has always been part of the cry in the stock chat rooms that cause pain to hedge funds, short sellers and other people who are trying to hold the theater operator's stock down.
AMC's shares have more than doubled in value since the gold mine investment was announced, reversing a months-long decline. The stock erased three months of losses.
sober-minded investors should use caution
Aron was quoted as saying that M&A is mandatory. Our shareholder base has given us capital to deploy with the clear expectation that we are going to do exciting things with the money theyentrusting to us.
The money came from selling more stock. AMC had 152.3 million shares outstanding at the end of 2020 and 513.8 million at the end of the fourth quarter. That is where Aron's war chest came from.
AMC Entertainment Holdings, Inc. Aron and AMC were supposed to fix AMC not engage in empire building. If the deals succeed, they could turn out to be lucrative, but many studies show that serial acquirers like AMC want to be less profitable over the long haul.
Mergers and acquisitions are always good. With all the yellow flags surrounding AMC Entertainment, its plan to go on a spending spree with scarce shareholder resources, rather than pay down the movie theater's debt, should plant another one for investors.
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