Please ensure Javascript is enabled for purposes of website accessibility

Why AMC Stock Jumped on Friday

By Howard Smith – Updated Oct 1, 2021 at 2:01PM

Key Points

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

AMC just repurchased some of its highest-cost debt.

What happened

Perennial meme stock AMC Entertainment (AMC -10.37%) often trades on nothing more than social media posts and Reddit forum discussions. But a note from the company about the business itself has the stock moving today. AMC shares jumped 5.5% in early trading, but soon pared some of those gains. As of 12:15 p.m. EDT, the stock was still up 2.3%. 

So what

The initial jump came after the company said that it has repurchased some of its highest-cost debt. It spent $41 million to repurchase $35 million of debt due in 2026 with a minimum 15% interest rate. The sum included closing out principal alongside paying down accrued and unpaid interest. Compared to the company's $5.5 billion in total long-term debt, the amount is peanuts. But AMC CEO Adam Aron used the announcement to also promote the company's improving business prospects.

Pulling cash from wallet to pay off debt.

Image source: Getty Images.

Now what

What may have piqued investor interest even more than the minor debt reduction was a summary of what AMC is doing to rebound from the pandemic slowdown, and how it plans to thrive going forward. The retail traders that made AMC a meme stock have been counting on Aron to lead the company to new heights, so they pay close attention to his comments. 

Aron pointed to "recent innovations" including using underutilized theaters to show "exclusive musical experiences, and WWE and UFC programming." He also noted AMC's commitment to accept payment in cryptocurrencies including Bitcoin, Ethereum, and potentially Dogecoin by the end of the year. 

Some of what Aron is proposing is gimmicky and likely won't help drive the business back to profitability. But he also expressed confidence in upcoming movie releases with studios using theatrical windows prior to releasing on streaming services. That's really what shareholders need for the company to survive, let alone thrive.

Howard Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

Stocks Mentioned

AMC Entertainment Stock Quote
AMC Entertainment
AMC
$6.05 (-10.37%) $0.70
Bitcoin Stock Quote
Bitcoin
BTC
$16,843.62 (-1.20%) $-204.28
Ethereum Stock Quote
Ethereum
ETH
$1,232.23 (-2.48%) $-31.28
Dogecoin Stock Quote
Dogecoin
DOGE
$0.10 (-3.10%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.