By Dhirendra Tripathi
Investing -- AMC (NYSE:AMC) shares erased gains of more than 20% in Thursday’s premarket after it the company announced plans to sell up to 11.55 million shares, while warning investors that they could lose their money if they bought shares at current prices.
The company said it may offer and sell from time to time as many as 11.55 million shares at its discretion in an at-the-market offering program.
"Our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last," AMC said in a statement.
"Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment."
AMC shares had more than doubled in Wednesday's session a day after it issued 8.5 million shares to Mudrick Capital, which the hedge fund sold on at a profit.
AMC shares are up 3000% so far this year, but this hasn’t changed the economic reality surrounding the company.
The pandemic has caused its long-term debt levels to soar to $5.4 billion as of the first three months of this year from less than $2 billion in 2016. And it’s still losing money, with analysts expecting another $100 million to go over the next 12 months.