Money Talks
AMC Raised $1 Billion From Meme Stock Mania. Why Didn’t GameStop Even Try?
The struggling video game retailer chose not to exploit an irrational market. Bad move.
With the stocks of GameStop, AMC, Nokia and others tumbling back to reality — down some 65% from their recent highs — it probably won’t be long before the Great Meme Stock War is over. But regardless, we already know who the big winner was: struggling theater chain AMC, which six weeks ago looked like it might be headed out of business and now has a realistic chance of making it until the pandemic ends. By contrast, GameStop — the true darling of meme stock investors — seems to be in little better shape than it was at the start of the year, despite having its stock jump from about $19 a share at the end of 2020 to as high as $480 a share last week. And the reason for this is simple: AMC cashed in on meme stock mania. GameStop, mysteriously, did not.
The math here isn’t that complicated: When a company’s stock price soars, it effectively means that investors are throwing free money at it. AMC, quite sensibly, decided to take that money, by doing what’s called an at-the-market offering of shares in the company. That meant it issued 50 million new shares of stock, and told its bankers to sell them on the open…
