AMC is causing controversy by investing a large amount of money in mining company that have no business connection.
According to CNBC on the 15th (local time), AMC purchased a 22% stake in Nevada gold mining company Hycroft Mining Holding for $27.9 million.
AMC CEO Adam Aaron described the investment as a “bold business diversification measure.”
However, the Wall Street Journal (WSJ) pointed out that AMC’s investment in mining company took advantage of the craze for mining “meme stocks” triggered by Russia’s invasion of Ukraine.
Hycroft was a gold miner on the verge of bankruptcy just a few weeks ago, and it was a company that individual investors did not even look up to.
However, the company has recently become a major trading company for U.S. individual investors.
As gold and silver prices soared due to the invasion of Ukraine, mining stocks became popular, and the company, which had a share price of less than a dollar, gained popularity as short-term buying drove it to become a popular meme stock.
AMC has also succeeded in raising new capital as it was driven into bankruptcy during the COVID-19 pandemic and received attention as meme stocks.
CEO Aaron argued that AMC’s investment would help Hycroft, which is in a liquidity crisis.
Hycroft shares soared 96 percent on the same day to close at $1.52 on news of AMC’s purchase of shares, up 9.35 percent from the previous day.
AMC also closed up 6.78 percent to $14.48.
Stock market experts criticized AMC’s investment in Hycroft.
