AMC swaps memes for mines

Becoming a meme stock was like striking gold for AMC in 2021. Now, it’s looking to really strike gold.

All that giggles is gold

AMC’s stock has been up and down like a livewire over the past year. But the playbook was somewhat rewritten when, rather than going bankrupt, the movie theatre chain company’s skin was saved by being turned into a meme stock – notably different, of course, from a laughing stock.

Thanks to its newfound meme cash, AMC is throwing caution to the wind once again, and has announced its purchase of a 22% stake in Hycroft Mining, a gold and silver mine in Nevada. Joining with another investor, Eric Sprott, a combined $56 million will be ploughed into Hycroft – opening the door to 15 million ounces of gold and 600 million ounces of silver resources.

Method in the madness

Hycroft is facing a severe liquidity issue. But AMC was in a similar position not so long ago, and this is exactly why they’re diving into the gold mine. There are undoubtedly red flags surrounding the purchase, not least comments from a 2021 Seeking Alpha report suggesting that “its valuation could fall lower due to the high debt load as well as the stock dilution risk”.

AMC are bullish, though. They’ve navigated the slippery waters of low liquidity once – who says they can’t do it again?