On Thursday, AMC Entertainment announced plans to sell 11 million shares amid its recent stock surge, according to CNBC.
Popular meme stock AMC has surged more than 560 percent in the past month. The company is capitalizing on its inflated valuation and raise capital before the bubble pops.
“In accordance with the terms of the Distribution Agreement, we may, through our sales agents, offer and sell from time to time up to an aggregate of 11,550,000 shares of our Class A common stock,” AMC said in an SEC filing.
Following the news, shares of AMC fell 25 percent. The sell-off got so intense, it was halted for volatility. However, the shares rebounded and were up as much as 6 percent in intraday trading.
Year-to-date, AMC is up 2,850 percent. Its market capitalization currently sits around $31 billion.
“We believe that the recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last,” the company said in the filing. “Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.”
Short sellers have ramped up their bets against AMC, further fueling the fire of Reddit traders.
AMC said it plans to use the money from the stock sale for "general corporate purposes." This includes paying down debt and acquiring of theater assets.