Leawood based AMC Theaters issues warning ahead of new stock sell
AMC Entertainment Holdings Inc.—based out of Leawood—made a peculiar announcement Thursday, warning investors they could potentially lose money ahead of a decision by the cinema giant to sell 11 million shares of their stock.
“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,” AMC says in its filing Thursday. “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.”
It’s uncommon for a company to issue a statement warning potential investors of the volatility of their stock. This is like saying, ‘beware of petting rabid animals because they might bite you.’
AMC has been the center of the rise of “meme” stocks since the beginning of the year. Meme stocks are generally triggered by small traders who cause a short squeeze on the stock. But this is often risky and can result in big losses.
And although AMC stock has been trending high recently, it might be short-lived. Analysts warn streaming services and other forms of entertainment will cause competition following the pandemic.
So if you’re riding the meme stock wave, please be careful.