What dilution? AMC can’t stop raising capital by selling more of its meme stock, and the market can’t stop buying.

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AMC Entertainment diluted its own stock again Tuesday, and retail investors still can’t get enough of it.

The meme stock soared almost 22% at Tuesday’s open after the theater chain announced it had sold 8.5 million shares of its common stock for $230.5 million to Mudrick Capital Management L.P. as part of it’s ongoing plan to capitalize on the company’s extreme online popularity with retail investors continuing to fan the flames of a stock that rocketed up 116.2% last week.

Tuesday’s deal is the third capital raising that AMC AMC, +19.22% has pulled off in the first half of 2021, following its $917 million equity and debt deal in January and the completion of its $428 at-the-market equity raise on May 14.  

In announcing the Mudrick Capital deal, AMC said in a statement that it plans to use the newest new capital in “the pursuit of value creating acquisitions of theatre assets and leases, as well as investments to enhance the consumer appeal of its theatres.” Like it did with the other two, AMC said it will also look for opportunities to reduce debt.

Mudrick Capital’s deal pegged AMC’s stock at $27.12 a share, 3.8% above Friday’s closing price of $26.12. AMC opened at $31.85 a share on Tuesday, it’s highest valuation in more than four years, appearing to obviate any concern that the company was diluting shares at the top of the market.

AMC’s CEO Adam Aron took to Twitter early Tuesday morning, putting his own social media spin on the deal before the market opened.

“Let me address the smart raising of equity capital,” Aron tweeted at 7.01 a.m. Eastern. “I believe one of the best things $AMC did in 2021 was to raise $428 million a few weeks ago, at $9.94 per share. Rather than dilution affecting AMC badly in the short term, as some feared, we greatly strengthened AMC.”

Aron went on to tweet that despite market fears for the future of cinemas, AMC is looking to grow and will use at least some of the $230.5 million to go after leases on theater chains that haven’t survived the pandemic. 

Aron even went as far as to name certain targets.

“First in our sights are the strongest Arclight/Pacific theatres that will not re-open due to pandemic pressures,” Aron tweeted, referring to the chain of hipster-beloved theaters in the Los Angeles area. “No one is out of the woods yet, but we like AMC’s improved liquidity, the increases of vaccinated people and the imminent release of new blockbuster movies.”

On Reddit, where retail traders have been singing the praises of AMC for months, users applauded Aron’s thinking even while coming to grips with the notion that a meme stock was gaining thanks to a deal with a hedge fund, widely-viewed as the existential enemy of the retail investor after January’s short squeeze.

“If a hedgie thinks this stock is cheap at $27, what do u think?” posited moodiebetts on Reddit board r/AMCstock.

“It was sold to a hedge fund. So what does that mean for apes?,” asked Ok_TXAGGIE12.

“Hedge funds don’t only short stocks,” replied fellow user, lump.

And there was even some targeted differentiation of hedge funders by market-focused users who refer to themselves as “Apes.”

“Jason Mudrick was long GME and AMC in January,” wrote Crooked Lemur, referring to Mudrick Capital’s founder and CEO. “He’s an ape.”

Still, numerous AMC message boards were filled with users questioning why Aron, referred to as “AA” would execute another capital raise and risk diluting the stock price by trusting a hedge fund with a large tranche of shares.

But Aron’s most vocal defender was himself.

“In our view, this is not mindless dilution, but rather this is very smart raising of cash so that we can grow this company,” Aron tweeted. “To many of you on Twitter, to grow YOUR company. Watch out naysayers, $AMC is going to play on offense again. Here we come!”