Dalian Wanda Group, controlled by Chinese billionaire Wang Jianlin, turned its losing investment in AMC Entertainment Holdings into a substantial $675 million windfall thanks to the recent social media-driven surge in the stock.
The company's investment in the movie chain operator was facing massive headwinds due to the pandemic. However, its losing investment became a big win for the company after the value of AMC's shares shot up by as much as 839% in January.
According to a Bloomberg analysis published this week, Dalian Wanda was quick to take advantage of the rally and cut its stake in AMC from 6.8% to just 0.002%. The move translated to an estimated gain of $675 million for the company, including dividends from its investment.
Despite the massive gain, Wang's wealth has continued to decline as his business struggles to recoup from the losses incurred during the pandemic. According to the Bloomberg Billionaires Index, Wang's fortune had dropped from $15.1 billion last year to just $9.2 billion this year.
Wanda Dalian bought AMC in May 2012. The company then took AMC public in 2013. Wanda Dalian gradually lowered its stake in the company as part of its strategy to lower its accumulated debt following a years-long buying spree of overseas assets.
When the pandemic hit, AMC's share lost more than 70% of its value as the company was forced to close down its movie theaters. The crisis also forced the company to consider options such as bankruptcy and a merger to ease its debt load.
The turnaround in the stock came after Reddit's WallStreetBets forum artificially created a demand for the company as a public retaliation against institutional short sellers.
While the stock has fallen from its $20.36 per share high in January, AMC's share prices have remained elevated. The stock also jumped at the news of the divestment. As of Monday, AMC's share closed at $13.47 per share - a big jump from its $2.12 per share price at the end of 2020.
The divestment, which was disclosed in a filing last week, was cheered on by Reddit users.
"The second coming is upon us! Been holding since January," one Reddit user wrote. "My AMC is green! Welcome back! Now to the moon please," another user said on the forum.
