AMC Entertainment unveiled Tuesday a new bet likely to prompt a double-take from investors: the movie theater chain is investing $28 million in a precious metal miner.
The theater giant, which was a darling of the so-called “meme” stock frenzy of 2021, announced the purchase of a 22 percent stake in Hycroft Mining Holding Corporation, which owns a mine in Nevada containing gold and silver deposits.
“To state the obvious, one would not normally think that a movie theatre company’s core competency includes gold or silver mining,” AMC Chief Executive Adam Aron said in a news release.
Aron pointed to a $1.8 billion “war chest to play on offense and grow our company” courtesy of individual investors who bought shares of AMC, GameStop and some other equities last year following an investment campaign partly organized on social media.
The mining investment comes as AMC’s core business has shown improvement compared with the worst days of Covid-19, but remains below its pre-pandemic level.
AMC reported a loss of $134.4 million in the most recent three-month stretch, in what the company called its “strongest quarterly result in two full years.” The company lost $1.3 billion for all of 2021.
Aron said strong ticket sales of the latest Batman and Spiderman releases heighten confidence the company is “on a glide path to recovery.”
“Our strategic investment being announced today is the result of our having identified a company in an unrelated industry that appears to be just like AMC of a year ago,” he said.
“It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue. Its share price has been knocked low as a result. We are confident that our involvement can greatly help it to surmount its challenges — to its benefit, and to ours.”
Aron categorized the Hycroft investment with other new ventures including the increase of IMAX and Dolby premium screens, NFT programs and the entry into the movie popcorn business.
Shares of AMC fell 0.5 percent to $13.49 in early afternoon trading, while Hycroft surged 23.7 percent to $1.73.
