Investors began rowing back from AMC Entertainment Holdings Inc. after the cinema operator announced it would sell more shares – while warning potential buyers they could lose all of their money.
AMC’s shares ended Thursday’s wild trading session, falling 18% to $ 51.34 after nearly doubling the day before. The stock appeared to continue its pre-trading session, posting double-digit percentage gains. The momentum was reversed, however, when the company filed with regulators to sell more than 11 million shares and warned against investing in its shares.
AMC stock lost up to 40%, later made up for all those losses, and then slipped again.
The company’s shares have soared in the past few days, expanding this year to 2,300% by the close of trading on Wednesday after the company sold a portion of new shares to hedge fund Mudrick Capital Management LP. The company had capitalized on its sudden popularity with individual investors by offering popcorn to shareholders visiting an AMC movie theater this summer.
The high volatility is reminiscent of late January, when individual traders were on a frenzy to buy shares in small, often ailing companies like GameStop Corp. and AMC sent fear down Wall Street. The frenzy has flared up again in the past few days, surprising some professional investors who expected the influence of amateur traders trading tips, profits and losses online to wane.