AMC Rescued from $600M Debt After 'Meme Stock' Rally

By now, almost the entire internet knows about the "meme stock" rally that had been happening, wherein a group of independent investors worked together through platforms like Reddit and helped raise the stocks of some struggling companies, notably GameStop and AMC--and now, the latter had been given new hope as the meme stock helped save it from its $600M debt.

Meme Stock Rally Rescues AMC

In a report by Polygon, the stunning turn of events happened when a private equity firm called Silver Lake decided to convert the corporate bonds it held into AMC Entertainment Holdings stock.

AMC's stock price continued to rise and fall amid all the stock frenzy, but the release from the debt is a permanent one, helping it gain new hope after the COVID-19 ravaged the movie theater business, which caused its downfall in 2020.

According to the report, AMC has already warned its investors that "there is substantial doubt" that they would be able to continue further.

However, AMC CEO and president Adam Aron had some good news this Monday, January 25, 2021.

In a press release published by the company, Aron announced that they were able to secure $917 million of new equity and debt capital, so this means that any talk of AMC's bankruptcy is now "completely off the table."

"A week ago, it was not crazy to think this company was doomed," Matt Levine of Bloomberg wrote recently. "Now it is entirely possible that it will survive and thrive and show movies in movie theaters for decades to come because everyone went nuts and bought meme stocks this week."

How the GameStop Stock Frenzy Came to be

GameStop, which started the stock frenzy, has made their first public announcement after their stocks made the front page in various news outlets, but instead of talking about their stock, they avoided the topic entirely.

But, what exactly happened?

For those who are still confused, what happened was the day-traders of Reddit, or the "retail investors," according to the industry, banded together on the popular subreddit called r/WallStreetBets, to buy GameStop stock and inflate the price, enabling them to make huge profits, as per PCMag.

Furthermore, they were able to win against the elites of Wall Street, who are mostly betting against the company, seeing that it's among the struggling companies these days.

After the stock frenzy, the movie "The Big Short" has also gained more attention, which is about hedge funds that shorted the housing market back in 2008 and allowed people these days to understand more what's currently happening.

Suspension of Trading Groups Online

Nevertheless, it seems like the meme stock rally is hurting other trading discussion groups.

Recently, a popular Facebook Wall Street discussion group was banned by the platform after alleged violations of inappropriate adult content, which the creator dismissed altogether.

Furthermore, the Discord server for r/WallStreetBets was also banned from the website due to the prevalence of hate speech and violence in the group, but the administrators of the Reddit group said they are now using a bot to block any bad words to avoid such repercussions again.

This article is owned by Tech Times

Written by: Nhx Tingson