Reddit Favorites Eye Stock Sales After Retail-Fueled Rallies

(Bloomberg) -- Some of the Reddit day-trading crowd’s favorite companies are capitalizing on their newfound popularity by selling shares to raise fresh capital.

American Airlines Group Inc. on Friday announced plans to sell up to $1.1 billion of shares after a 17% climb over the past two sessions amid Reddit chatter about squeezing shorts.

Also on Friday, pot stock Sundial Growers Inc. erased a premarket surge after announcing a $100 million stock sale at a discount to Thursday’s closing price. Small-cap pharma stock JanOne Inc. raised equity Friday after shares more than doubled over the past two days in a surge that traders linked to retail speculation. Shares in all three stocks fell on Friday after the deals were announced.

Those share sales follow a $305 million raise by AMC Entertainment Holdings Inc. earlier this week. Traders are expecting even more deals as firms like these seek to repair pandemic-battered balance sheets while demand for shares is high.

The stocks are among those that surged of late as investors continue a relentless buying spree in firms touted on Reddit. Traders are keeping their eyes on other Reddit picks, such as GameStop Corp., Express Inc., Bed Bath & Beyond Inc., and Naked Brand Group Ltd., for potential stock sales of their own after shares further extended run-ups on Friday.

AMC is weighing a second offering, people familiar with the matter said earlier, while at least one analyst has called for GameStop to bring a stock sale for “as much as the market can absorb.”

American Taps Equity Again

American’s at-the-market offering replaces an equity distribution agreement from last year, under which the company raised $882 million amid an unprecedented travel collapse caused by the coronavirus pandemic. Like its rivals, the company has also received billions of dollars in federal aid.

The Fort Worth, Texas-based carrier is still reeling from losses and an uncertain outlook as travel remains depressed. American, the most shorted stock among U.S. airlines, gave a cautious outlook Thursday on when a recovery would materialize. U.S. passenger totals this week averaged about a third of year-ago levels.

American ended last year with $14.3 billion in total available liquidity.

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