By Aaron Saldanha and Devik Jain
Jun 2 (Reuters) – Shares of AMC Entertainment, a favorite among Reddit users, rose sharply on Wednesday as the group of individual investors behind its recent rally was unfazed by a hedge fund’s decision to tweak their stakes in the operator of movie theaters.
At 1401 GMT, AMC shares were up 30.3% after breaking the $ 40 threshold for the first time, trading at $ 41.74.
Mudrick Capital Management bought 8.5 million new AMC shares for $ 230 million on Tuesday and sold them at a profit, according to a source. The bold move by the fund and the company was to take advantage of the rise in stocks driven by retail investors.
Other institutional traders were still not considering rises in so-called “meme stocks,” which also include GameStop Corp and BlackBerry Ltd, but the shares of those three firms continued to trade higher.
“It’s not rational, but don’t bet against it,” said an operator from Berlin.
AMC is among the biggest beneficiaries of a vigorous market move since January involving both hedge funds and a new generation of small operators focused on social media.
On Wednesday, the company launched a new scheme that offered even the smallest investor a free bag of large popcorn if they signed up for a regular newsletter.
“Even if our shareholders now number in the millions … those people are the owners of AMC and I work for them,” said CEO Adam Aron.
AMC shares are up more than 1,400% this year and are trading at more than 10 times the median target price of analysts.
(Reporting by Sagarika Jaisinghani, Aaron Saldanha and Devik Jain in Bengaluru and Thyagaraju Adinarayan in London; Edited in Spanish by Janisse Huambachano)