GameStop: How troubled companies are taking advantage of the stock market sling

The revolt of small holders against short sellers has pushed up the prices of companies hit hard by the crisis. American Airlines and the cinema chain AMC took the opportunity to issue new shares. The shareholders of these companies are rubbing their hands.

The share price of the movie theater chain AMC has jumped more than 500% on the stock market this year, which has allowed it to raise several hundred million dollars in the markets.

A golden opportunity. By scaring off short sellers, the stock market sling against Wall Street has pushed up the prices of companies struggling with the crisis. And some are taking advantage of the bubble to strengthen their balance sheet. The AMC chain of cinemas, one of the favorite titles of the WallStreetBets forum on Reddit, has ruled out any risk of imminent bankruptcy thanks to capital increases of $ 1.2 billion since mid-December. American Airlines for its part announced on Friday that it wanted to raise 1.1 billion on the equity markets. A natural reflex. Other companies have not hesitated to take advantage of the enthusiasm of stock marketers to build up a real war chest in recent months. Starting with Tesla, which raised $ 12 billion in 2020, an amount equivalent to Renault’s current valuation.

AMC and American Airlines have been widely attacked by hedge funds, with short positions equivalent to over 25% of their free float. It did not take more for them to attract the favors of stock marketers. American Airlines jumped nearly 9% last week, and is now trading at over $ 17 a share. Much more than the 12.87 dollars per share at which it carried out its last capital increase, between October and January, in an “at the market” operation, which consists in placing securities over the water at market price. .