What happened
Shares of AMC Entertainment (AMC 8.23%) are continuing their run higher this morning, rising 4.8% as of 10:37 a.m. EST. There has been no news specific to the theater operator, but fellow meme stock GameStop (GME -3.94%) is soaring 13% after chairman Ryan Cohen disclosed he bought 100,000 shares of the video game retailer, so it seems traders are reacting to the development.
So what
After a long, steady slide lower over the past year, AMC shares began turning up following the announcement it had purchased a 22% stake in gold and silver mining outfit Hycroft Mining (HYMC -4.38%), an all-but-defunct miner that was strapped for cash.
Image source: Getty Images.
The market largely believes it's a relatively low risk/high reward investment by the theater operator since the $28 million AMC sunk into Hycroft is small compared to the $1.8 billion it has in liquidity available to it.
While this move does nothing to build up its cinema operations, even if the miner completely collapses and goes under, that won't really hurt AMC, and the rewards for helping it jump-start operations again could be large.
Now what
AMC's stock has had such spurts of growth before that had the theater chain's loyal retail investors swearing this time was the start of the "mother of all short squeezes," but they've always petered out and the slog downward has always resumed.
There are predictions once again that the MOASS is at hand, but it remains to be seen whether simply rising in sympathy with a fellow meme stock is the trigger the faithful are looking for.
