After its shares surged by 96%, AMC embraces 'meme stock' status

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Being a meme stock is a lot like being Spider-Man: You get bit by a strange insect, gain supernatural strength but are super awkward about it, then eventually harness your new skills to save the world.

Right now, AMC is realizing that with great power, comes great opportunity to build for the future. Yesterday, to capitalize on its extraordinary (and some say baffling) popularity among individual investors, the theater chain unveiled a program called AMC Investor Connect, which aims to create a direct line between the chain and its army of individual shareholders.

• Through the program, individual investors will get benefits like a free large popcorn and invitations to special screenings.

Zoom out: After gaining a stunning 96% yesterday, AMC stock has now increased nearly 3,000% in 2021, which it owes to frenzied interest from retail traders who own more than 80% of the company's outstanding shares.

But only recently has AMC decided to take advantage. Over the weekend, it sold $230 million worth of stock to a hedge fund in order to "go on the offense again."

What it all means

It's become clear that "meme stock mania," the phenomenon of an asset shooting up in price for no other reason than it's trending on social media, is a feature, not a bug, of modern financial markets. We thought meme stocks peaked with the bankrupt Hertz last summer, or GameStop this winter, but just this week...

• Dogecoin, the crypto based on a joke, popped more than 30% yesterday in anticipation of Coinbase allowing it to be traded on its Pro platform. With a market cap of about $54 billion, it's now the sixth-most valuable crypto.
• An Elon Musk tweet about the viral song "Baby Shark" sent shares of Samsung Publishing, a company that owns a big stake in the song's producer, up more than 10%.

Looking ahead...given AMC's success in leveraging its internet fame for tangible business improvements, other meme stocks might follow its lead.

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