Business|AMC’s share sale slams the brakes on its eye-popping rally.
AMC Entertainment’s gravity-defying run in the stock market came to halt on Thursday after the movie-theater chain said it planned to sell an additional 11.55 million shares. At the stock’s closing price on Wednesday, that sale would raise more than $720 million.
The stock slid nearly 30 percent in early trading, after climbing about 20 percent in premarket trading ahead of the share sale announcement.
On Wednesday AMC’s price nearly doubled, to $62.55 a share, after the company said it would offer free popcorn and other perks to the more than three million retail investors that own shares in the company.
AMC has been embraced by small investors seeking to raise the price of certain companies that have come to be known as meme stocks because the traders promote their ideas on social media platforms. Their interest in companies has resulted in eye-popping surges in share prices — AMC was trading at just above $2 a share at the start of the year.
These small shareholders now own 80 percent of AMC, the company said. Other meme stocks also tumbled in early trading Thursday, including GameStop, which dropped 5 percent.
Elsewhere in the markets.
U.S. stocks fell as traders cautiously approached two reports on the labor market. Weekly data on initial claims for state jobless benefits showed that claims rose slightly from last week to about 425,000.
On Friday, the Labor Department will publish its monthly jobs report. Last month, that report showed an unexpectedly small increase in hiring in April.
The S&P 500 dropped about half a percent in early trading.
Investors are also watching the Federal Reserve closely for signs that it will pull back its monetary stimulus, which has helped keep asset prices high. Patrick Harker, the president of the Federal Reserve Bank of Philadelphia, said on Wednesday that it “may be time to at least think about thinking about tapering” the Fed’s government bond-buying program.
On Wednesday, the Federal Reserve announced that it would sell its relatively small holdings of corporate bonds, which were bought last year to stabilize the bond market in the early months of the pandemic.
Most European stock indexes were down on Thursday. The FTSE 100 in Britain dropped 0.9 percent, falling more than other major European indexes. There is speculation that the final lifting of social-distancing restrictions in Britain, scheduled for June 21, might be delayed because of the spread of the coronavirus variant first discovered in India.