AMC: Ape Mining Co.

From a near-bankrupt theater company to a meme that took the internet by storm to a questionable acquisition, AMC continues to surprise investors, the apes, and those watching from the sidelines. On March 15th the company announced its purchase of a 22% stake in Hycroft Mining Holding and its 71,000-acre gold and silver mine in northern Nevada. The Hycroft Mine has about 15 million ounces of gold deposits and some 600 million ounces of silver deposits according to AMC. “To state the obvious, one would not normally think that a movie theatre company’s core competency includes gold or silver mining,” said AMC CEO Adam Aron.

While the hope of the “apes”  was to squeeze the living hell out of short-sellers, they have been gifted an 82% loss since the peak in June of last year. The company continues to lose money quarter over quarter and this purchase seems like an attempt at “diversifying” as they face a drawdown in ticket sales.”In the fourth quarter, AMC reported yet another net loss of $134.4 million and revenue that is still 19.2% below 2019’s pre-pandemic levels. In February, the company announced a refinancing of more than $5 billion in debt it is carrying on its balance sheet.” (Business Insider) “Our strategic investment being announced today is the result of our having identified a company in an unrelated industry that appears to be just like AMC of a year ago. It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue,” Aron said. The company’s stock is up 6% for the week so far after the news broke. 

CNBC’s Jon Fortt criticized the purchase stating “AMC thinks it now has the expertise to convince retail investors to buy in.” Rightly so the AMC craze has sucked in those looking to stick it to the man, whoever that is, and left many with immense losses that they weren’t expecting. The image below is from the subreddit r/wallstreetbets displaying an account down $40,000 on AMC alone. To those thinking this may be a “buying opportunity” or see the common Twitter posts attempting to pump the stock, I wouldn’t. The HYMC company was trading below $1.00 at the start of the month and for good reason. This stake is a poor example of diversification.