What happened
Shares of AMC Entertainment Holdings (AMC -3.25%) are tumbling 9.1% at 11:06 a.m. ET on Wednesday after defunct gold and silver miner Hycroft Mining (HYMC -3.11%) reported it received a delisting notice from the Nasdaq Stock Market.
AMC surprised investors earlier this year by taking a 22% stake in Hycroft in exchange for a $28 million cash infusion. Metals investor Eric Sprott invested a similar amount into Hycroft in return for the same percentage ownership position.
Image source: Getty Images.
So what
As AMC was battling for its own survival, investing in a mining company that hadn't been operational in some time and hadn't performed the necessary tests yet to determine if its novel mining strategy would be feasible was seen as being diversionary at best. While it was a relative small amount the theater company was investing, many outside observers still thought the money could be better spent on its own business.
AMC is still struggling to get moviegoers back into theater seats. According to data from industry site The Numbers, tickets sold in 2022 so far are running at an annualized rate of over 848 million, which is almost double last year's total, but still remains 30% below 2019's 1.2 billion tickets sold.
Now what
Hycroft is trading below $0.70 a share and has closed below $1 a share every day since Aug. 15. The Nasdaq told the miner it has 180 days to get its stock back up above the $1 threshold for 10 consecutive days.
Many companies in similar situations, whose stock does not rise to that level again, often resort to artificially raising the price by effecting a reverse stock split. While that can help get shares up for the requisite period, many times they simply tumble back below afterward.
