Reel change: AMC's latest bet is in... mining
AMC Entertainment announced a $28 million investment in a mining company as it diversifies from the movie theater business (AFP/SCOTT OLSON) (SCOTT OLSON)
Tue, March 15, 2022,
AMC Entertainment unveiled Tuesday a new bet likely to prompt a double-take from investors: the movie theater chain is investing $28 million in a precious metal miner.
The theater giant, which was a darling of the so-called "meme" stock frenzy of 2021, announced the purchase of a 22 percent stake in Hycroft Mining Holding Corporation, which owns a mine in Nevada containing gold and silver deposits.
"To state the obvious, one would not normally think that a movie theatre company's core competency includes gold or silver mining," AMC Chief Executive Adam Aron said in a news release.
Aron pointed to a $1.8 billion "war chest to play on offense and grow our company" courtesy of individual investors who bought shares of AMC, GameStop and some other equities last year following an investment campaign partly organized on social media.
The mining investment comes as AMC's core business has shown improvement compared with the worst days of Covid-19, but remains below its pre-pandemic level.
AMC reported a loss of $134.4 million in the most recent three-month stretch, in what the company called its "strongest quarterly result in two full years." The company lost $1.3 billion for all of 2021.
Aron said strong ticket sales of the latest Batman and Spiderman releases heighten confidence the company is "on a glide path to recovery."
"Our strategic investment being announced today is the result of our having identified a company in an unrelated industry that appears to be just like AMC of a year ago," he said.
"It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue. Its share price has been knocked low as a result. We are confident that our involvement can greatly help it to surmount its challenges -- to its benefit, and to ours."
Aron categorized the Hycroft investment with other new ventures including the increase of IMAX and Dolby premium screens, NFT programs and the entry into the movie popcorn business.
Shares of AMC fell 0.5 percent to $13.49 in early afternoon trading, while Hycroft surged 23.7 percent to $1.73.
jum-jmb/cs
AMC Entertainment announced a $28 million investment in a mining company as it diversifies from the movie theater business (AFP/SCOTT OLSON) (SCOTT OLSON)
Tue, March 15, 2022,
AMC Entertainment unveiled Tuesday a new bet likely to prompt a double-take from investors: the movie theater chain is investing $28 million in a precious metal miner.
The theater giant, which was a darling of the so-called "meme" stock frenzy of 2021, announced the purchase of a 22 percent stake in Hycroft Mining Holding Corporation, which owns a mine in Nevada containing gold and silver deposits.
"To state the obvious, one would not normally think that a movie theatre company's core competency includes gold or silver mining," AMC Chief Executive Adam Aron said in a news release.
Aron pointed to a $1.8 billion "war chest to play on offense and grow our company" courtesy of individual investors who bought shares of AMC, GameStop and some other equities last year following an investment campaign partly organized on social media.
The mining investment comes as AMC's core business has shown improvement compared with the worst days of Covid-19, but remains below its pre-pandemic level.
AMC reported a loss of $134.4 million in the most recent three-month stretch, in what the company called its "strongest quarterly result in two full years." The company lost $1.3 billion for all of 2021.
Aron said strong ticket sales of the latest Batman and Spiderman releases heighten confidence the company is "on a glide path to recovery."
"Our strategic investment being announced today is the result of our having identified a company in an unrelated industry that appears to be just like AMC of a year ago," he said.
"It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue. Its share price has been knocked low as a result. We are confident that our involvement can greatly help it to surmount its challenges -- to its benefit, and to ours."
Aron categorized the Hycroft investment with other new ventures including the increase of IMAX and Dolby premium screens, NFT programs and the entry into the movie popcorn business.
Shares of AMC fell 0.5 percent to $13.49 in early afternoon trading, while Hycroft surged 23.7 percent to $1.73.
jum-jmb/cs
Hycroft Mining Holding saw big spikes in its stock price and trading volume in the days leading up to the announcement that movie theater chain AMC Entertainment had agreed to purchase a major stake in the company.
Two weeks prior to Tuesday's announcement, on March 1, the 90-day average trading volume of Hycroft shares was around 355,000 according to CNBC analysis of FactSet data.
The day before AMC's announcement, 58.6 million shares exchanged hands and the 90-day average was 10.5 million.
© Provided by CNBC
View of the huge Gold and Silver Allied Nevada-Hycroft Mine near Sulphur in Black Rock Desert, Nevada, near the small towns of Sulphur and Gerlach.
Hycroft Mining Holding, a small mining firm with a troubled financial history, saw big spikes in its stock price and trading volume in the days leading up to the announcement that movie theater chain AMC Entertainment had agreed to purchase a major stake in the company.
Shares of Hycroft jumped about 12% Tuesday afternoon to $1.55, after previously surging even higher. None of the parties involved have been accused of illegal or unethical activity.
Adam Aron, the CEO of AMC, cited legal advice and Hycroft's volume when he explained why he canceled a live interview with CNBC's Jim Cramer and David Faber on Tuesday morning. "I am excited about our investment in HYMC, but there has been so much volume in that stock today, lawyers insisted I stay off air," Aron tweeted.
Two weeks prior to Tuesday's announcement, on March 1, the 90-day average trading volume of Hycroft shares was around 355,000, according to CNBC analysis of FactSet data. That average would grow dramatically over the next two weeks.
On March 4, the trading volume began to spike. More than 3.7 million shares exchanged hands on that day, pushing the 90-day average to more than 400,000 shares.
On March 7, the trading volume jumped to 6.2 million shares. Then it hit 202.7 million the next day. With that, the 90-day average became 2.8 million shares.
Forty-six million shares of Hycroft changed hands on March 9. The next two days saw extreme increases in volume: 220 million shares were bought and sold on March 10, and 341.4 million were traded on March 11.
By the close on March 11, the 90-average was 9.9 million. Then, on Monday, the day before AMC's announcement, 58.6 million shares exchanged hands, and the 90-day average was 10.5 million.
Between March 4 and March 15, the daily volume average was 144.9 million shares. Comparatively, from Feb 22 to March 3, a period that also includes eight trading days, the daily volume average was under 800,000 shares. Hycroft has over 60.4 million shares outstanding, according to FactSet.
Hycroft Mining Holding, a small mining firm with a troubled financial history, saw big spikes in its stock price and trading volume in the days leading up to the announcement that movie theater chain AMC Entertainment had agreed to purchase a major stake in the company.
Shares of Hycroft jumped about 12% Tuesday afternoon to $1.55, after previously surging even higher. None of the parties involved have been accused of illegal or unethical activity.
Adam Aron, the CEO of AMC, cited legal advice and Hycroft's volume when he explained why he canceled a live interview with CNBC's Jim Cramer and David Faber on Tuesday morning. "I am excited about our investment in HYMC, but there has been so much volume in that stock today, lawyers insisted I stay off air," Aron tweeted.
Two weeks prior to Tuesday's announcement, on March 1, the 90-day average trading volume of Hycroft shares was around 355,000, according to CNBC analysis of FactSet data. That average would grow dramatically over the next two weeks.
On March 4, the trading volume began to spike. More than 3.7 million shares exchanged hands on that day, pushing the 90-day average to more than 400,000 shares.
On March 7, the trading volume jumped to 6.2 million shares. Then it hit 202.7 million the next day. With that, the 90-day average became 2.8 million shares.
Forty-six million shares of Hycroft changed hands on March 9. The next two days saw extreme increases in volume: 220 million shares were bought and sold on March 10, and 341.4 million were traded on March 11.
By the close on March 11, the 90-average was 9.9 million. Then, on Monday, the day before AMC's announcement, 58.6 million shares exchanged hands, and the 90-day average was 10.5 million.
Between March 4 and March 15, the daily volume average was 144.9 million shares. Comparatively, from Feb 22 to March 3, a period that also includes eight trading days, the daily volume average was under 800,000 shares. Hycroft has over 60.4 million shares outstanding, according to FactSet.
© Provided by CNBC
Representatives from Mudrick Capital, a large shareholder in Hycroft, and AMC did not immediately respond to CNBC's request for comment. The Securities and Exchange Commission, which is the leading regulator of U.S. stock markets, declined to comment.
Also during the days leading up to AMC's announcement, Hycroft's share price went from around 33 cents on March 7 to $1.88 on March 11. On Monday, the day before the announcement, shares closed at $1.39.
Representatives from Mudrick Capital, a large shareholder in Hycroft, and AMC did not immediately respond to CNBC's request for comment. The Securities and Exchange Commission, which is the leading regulator of U.S. stock markets, declined to comment.
Also during the days leading up to AMC's announcement, Hycroft's share price went from around 33 cents on March 7 to $1.88 on March 11. On Monday, the day before the announcement, shares closed at $1.39.
© Provided by CNBC
AMC is spending $27.9 million in cash for the deal and will receive roughly 23.4 million shares in the company and an equal amount of stock warrants. The deal would make AMC the owner of roughly 22% of Hycroft.
The movie theater is purchasing these shares at around $1.19 a piece. Shares of Hycroft closed Monday at $1.39 each, up nearly 400% from the 52-week low of 28 cents seen on March 17, 2021. The stock neared this low on March 3, when shares traded at 29 cents a piece.
Early in the day Tuesday, shares jumped to $2.72 a piece, but settled around $1.60 during midday trading, up 15%.
Aron, the AMC CEO, was slated to appear on CNBC on Tuesday morning, but he canceled his interview, saying he wasn't comfortable making public comments on the move due to volatility in Hycroft's stock.
AMC declined to comment beyond what Aron said in the press release announcing the move, but Aron later tweeted to apologize to Cramer and Faber for canceling his appearance.
Hycroft, meanwhile, said in November that it would likely need to raise additional cash to meet its financial obligations over the next year.
That same month, the company laid off more than half of its workers at its mine in western Nevada, ceasing mining operations there. At the time, the company said it would focus more on processing gold and silver sulfide ore, according to a report from the Elko Daily Free Press. Hycroft's corporate offices are in Denver.
— CNBC's Chris Hayes contributed to this story.
AMC is spending $27.9 million in cash for the deal and will receive roughly 23.4 million shares in the company and an equal amount of stock warrants. The deal would make AMC the owner of roughly 22% of Hycroft.
The movie theater is purchasing these shares at around $1.19 a piece. Shares of Hycroft closed Monday at $1.39 each, up nearly 400% from the 52-week low of 28 cents seen on March 17, 2021. The stock neared this low on March 3, when shares traded at 29 cents a piece.
Early in the day Tuesday, shares jumped to $2.72 a piece, but settled around $1.60 during midday trading, up 15%.
Aron, the AMC CEO, was slated to appear on CNBC on Tuesday morning, but he canceled his interview, saying he wasn't comfortable making public comments on the move due to volatility in Hycroft's stock.
AMC declined to comment beyond what Aron said in the press release announcing the move, but Aron later tweeted to apologize to Cramer and Faber for canceling his appearance.
Hycroft, meanwhile, said in November that it would likely need to raise additional cash to meet its financial obligations over the next year.
That same month, the company laid off more than half of its workers at its mine in western Nevada, ceasing mining operations there. At the time, the company said it would focus more on processing gold and silver sulfide ore, according to a report from the Elko Daily Free Press. Hycroft's corporate offices are in Denver.
— CNBC's Chris Hayes contributed to this story.
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