AMC Playing The 'Game' Lot Better Than GameStop, Says NYU Professor Aswath Damodaran

AMC Entertainment Holdings Inc. AMC, which raised $587.4 million in additional capital through a stock offering on Thursday, is playing the "game" a lot better than GameStop Corp. GME, according to New York University Professor Aswath Damodaran.

What Happened: Damodaran told CNBC that AMC Entertainment is taking advantage of what might be an opportunistic moment of raising capital as the movie theatre chain is in a business that is in transition.

“I think at the moment there is a feedback loop from the price going up, and AMC, I think, is playing this game a lot better than GameStop is,” Damodaran.

See also: How to Buy AMC Stock

The professor noted that e-commerce giant Amazon.com Inc.’s AMZN acquisition of MGM Studios and AT&T Inc. T exiting the media business shows the business is “ripe for change.”

See Also: AMC, Cinemark, Marcus, Imax: How Do The Cash Balances Of Top Movie Theater Chains Compare?

Why It Matters: Shares of AMC Entertainment and GameStop have surged in recent days as retail investors pile into WallStreetBets-favorite stocks and attempt a new short squeeze. Unlike GameStop, AMC Entertainment has capitalized on the surge in its stock price with several equity sales, including one of 8.5 million shares of its common stock to hedge fund Mudrick Capital on Tuesday.

AMC said it raised about $587.4 million of new equity capital by selling 11.55 million shares in an at-the-market (ATM) equity program, announced earlier on Thursday.

AMC Entertainment President and CEO Adam Aron noted that bringing in an additional $587.4 million of new equity on top of the $658.5 million already raised in the current quarter has resulted in a total equity raise of $1.246 billion, helping the company to substantially strengthen and improve its balance sheet.

AMC’s outstanding share count is already up more than 333% since the beginning of 2020 as the company has been aggressively selling stock to raise money to stave off bankruptcy.

Price Action: AMC Entertainment shares closed 17.9% lower in Thursday’s regular trading session at $51.34 and further fell 7.5% in the after-hours session to $47.50.

Read Next: Missing Out On Massive AMC Stock Surge, Mudrick Capital Says Has 'No Regrets' On Selling: NYPost

Photo by Mike Mozart on Flickr