Shares of Hycroft Mining Holding Corp. soared on heavy volume Thursday, giving investor AMC Entertainment Holdings Inc. a reason to cheer despite the gold and silver miner reporting a first-quarter loss that doubled and revenue that was cut in half.
rocketed as much as 35.0% intraday, before paring some gains to be up 14.3% in morning trading. Volume ballooned to 64.2 million shares, already more than the full-day average of about 57.9 million shares, and enough to make the stock the most actively traded on major U.S. exchanges.
The company disclosed late Wednesday net losses that widened to $22.06 million, or 27 cents a share, from $9.69 million, or 16 cents a share, in the year-ago period. The per-share loss widened by less than net losses because the number of shares outstanding jumped 35.6% to 81.20 million.
Sales sank 51.8% to $9.17 million, while cost of sales declined by less, by 42.3% to $16.97 million.
Cash flow was negative $6.92 million, compared with $14.76 million last year, and the company said it does not expect to generate net positive cash flow from operations “for the foreseeable future.”
Hycroft’s stock flashed onto investors’ screens after AMC’s surprise announcement on March 15 that it was buying a stake in the gold and silver miner. AMC Chief Executive Adam Aron explained that the purchase was part of a plan to find “transformational” acquisition opportunities with the war chest that was accumulated by taking advantage of the “meme”-induced rally in its stock.
While Aron acknowledged that the purchase would be questioned, given that Hycroft was facing a cash squeeze, he said he was certain AMC would make a lot of money on the investment.
The latest filing showed that AMC owned 46.82 million Hycroft shares, or 21.3% of the shares outstanding. Thursday price gain would boost the value of those shares by $9.4 million.
Hycroft’s stock had rocketed 641.7% in March on the back of AMC’s announcement, then fell 38.7% in April. So far in May, the stock has gained 13.5%.
Meanwhile, AMC’s stock slumped 5.4% in morning trading, putting it on track for the lowest close since March 15, the day the Hycroft investment was announced. It has now tumbled 45.3% year to date, while fellow meme-stock GameStop Corp. GME has lost 20.6% and the S&P 500 index SPX has dropped 12.4%.
AMC’s initial agreement with Hycroft included investing $27.9 million in cash for 23.41 million stock “units” priced at $1.193 per unit. Each unit consisted of one common share of Hycroft and a warrant to buy one common share at $1.068 per share.
Hycroft’s stock was recently trading at $1.60, meaning that so far Aron was right about AMC making good money on its investment.