Shares of retail investor darling AMC Entertainment took a major hit Thursday after the movie theater company announced plans to sell up to 11.5 million shares.

The movie theater chain, which is hoping for a strong recovery after a disastrous 2020 due to Covid-19 restrictions, said the funds raised would go to "general corporate purposes," including debt repayment.

But its share price fell 28 percent in mid-morning trading to $49.94, after nearly doubling in value on Wednesday.

AMC signaled in a securities filing Thursday that more "extreme volatility" could be ahead, noting the wild swings in the past week that have taken the price from a low of $12.18 on May 24, to a high of $72.62 on Wednesday.

The company said the price moves were "unrelated to our underlying business, or macro or industry fundamentals."

AMC has been one of the leading embodiments of the so-called "Reddit Revolution," a surprise investor phenomenon in 2021 in which retail investors organized on social media have rallied to bolster beaten-down equities.

The dynamic first surfaced earlier this year, when shares of video game store chain GameStop surged amid a campaign aimed at combatting professional investors who make money by betting on share price drops.

Over time, the trend has expanded beyond retail investors as other money managers capitalize on momentum trades.

Shares of AMC Entertainment tumbled after it announced a new equity offering
Shares of AMC Entertainment tumbled after it announced a new equity offering GETTY IMAGES NORTH AMERICA / SCOTT OLSON

On Wednesday, shares of AMC nearly doubled to $62.55 by the close after the chain announced a new program to connect with individual investors who have bought shares.

Under "AMC Investor Connect," shareholders will enjoy benefits including a free large popcorn this summer, the company announced.

The initiative comes as movie theaters seek to lure back customers after a devastating 2020 due to the Covid-19 pandemic. The hope is that coronavirus vaccines will revive interest in seeing movies away from home.

However, the company also warned investors about the risks, saying "we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment."

Few are willing to predict what will come next.

"The question with these types of parabolic moves isn't whether they're reasonable, but where they will stop," said Matt Weller, global head of market research at City Index.

"After all, in the words of the great John Maynard Keynes, 'markets can stay irrational longer than you can stay solvent.'"

Coronavirus