According to conventional opinion, when a public business’s stock is overpriced, the corporation should issue fresh shares. As a result, the corporation raises capital before the share price drops. Tesla rode a similar surge of investor enthusiasm last year to raise $12 billion in 2020.

It’s now AMC Entertainment’s turn. This year, the movie theater business issued a flood of additional shares as a result of its meme-fueled popularity on Reddit. While stock issuances often erode share price, AMC issued more than 100 million new shares without pausing: the stock price is presently 23 times greater than it was at the beginning of 2021.

That money may soon be depleted. AMC is stymied by the fact that its corporate charter only allows it to issue 524 million shares of common stock. AMC can only issue 11 million new shares before reaching its self-imposed limit of 513 million shares outstanding. To overcome the obstacle, CEO Adam Aron has requested that shareholders authorize the issuance of 25 million new shares.

Normally, this would not be a difficult request, especially if Wall Street thinks that a stock is expensive. Because institutional investors frequently have the upper hand, retail investors rarely have a say. In the United States, the top ten institutional investors, such as hedge funds and endowments, own 43 percent of the typical public firm. Retail investors’ voting power is often so diluted that it rarely influences management choices.

No, not this time. Retail investors, who have powered AMC’s resurgence in recent months, own more than 80% of the company’s stock, dwarfing institutional investors’ interests. Many of them are activist investors who have banded together on Reddit groups known as subreddits. And it appears that these investors have taken decisive control over the company’s actions.

On Reddit, meme traders aired their objections to the fresh stock issuance in order to execute another short squeeze and force the price higher. They believe that Wall Street short-sellers will soon be forced to purchase back their shares at a loss, sending the price even higher.