Trading in AMC shares was halted briefly on Wednesday after the company’s stock price soared on the promise of free popcorn to investors, in the latest example of how the ‘meme-trading’ frenzy is spreading across Wall Street.
Shares rose 93 percent to $61.82 a share on Wednesday before pulling back, causing trading to halt twice on the New York Stock Exchange. It has increased more than 450 percent in the last month.
Other “meme stocks” such as Bed Bath & Beyond and BlackBerry also posted significant gains on Wednesday.
AMC was the most traded stock on US stock exchanges on Wednesday, according to Bloomberg data-tracking companies with a market capitalization of more than $500 million, while BlackBerry ranked third in terms of turnover.
AMC’s new Investor Connect program, which will also offer perks such as invitations to “special offers,” underscores how the growing power of individual traders is attracting the attention of publicly listed companies and professionals. Wall Street investors.
Meme’s stock was thrust into the spotlight when retail investor trading soared to record highs in the first two months of this year, buoyed by message boards on social media platform Reddit like r/WallStreetBets.
Retail investors have joined the market in record numbers since the pandemic hit, as retail trade volume doubled between 2019 and 2021, from less than 10 percent to more than 20 percent, according to Piper Sandler data.
AMC was one of a group of major beneficiaries. Hobbyists now make up a major group of the chain’s total shareholder base, owning about 80 percent of the company. AMC said Wednesday that more than 3.2 million new individual investors will own stakes in the company by March 2021.
Big investors also rode the wave. AMC said Tuesday that it sold 8.5 million new shares to hedge fund Mudrick Capital Management at about $27 per share — a significant premium over AMC’s $2 share price at the end of last year. Hours later, Mudrick sold the shares after news of a fundraiser sent her to $33.53.
Other publicly-listed US companies are thinking about how to better deal with the new generation of individual shareholders and their growing market power. Shareholder engagement events such as general meetings have been moved online during the pandemic, making it easier for every day investors to participate and vote.
Public meetings operator Lomi said he has noticed a significant increase in the participation of individual shareholders, whether they attend general meetings, ask questions or participate in voting. This has been amplified by easy-to-use brokerage platforms like Robinhood that send contributors by email notifying them of voting deadlines.
Companies tell us that the demographics of people who attend meetings are different. He’s not an audience for tea and biscuits, said Richard Taylor, CEO of Lumi. “Once the barriers of who can get there are removed, the demographics of who can come and ask questions change.”