It’s the kind of rescue that the most indebted companies in America can only dream of: a fresh injection of cash that doesn’t hurt their already depressed stock price or load even more costly debt onto their balance sheet.
Yet thanks to the army of day traders who use Reddit to tout and bid up out-of-favor stocks and squeeze short sellers, firms such as American Airlines Group Inc. and AMC Entertainment Holdings Inc. have found themselves on the receiving end of just such a lifeline.
Both took steps over the past week to sell hundreds of millions of dollars worth of shares and secure much-needed liquidity. Besides the companies themselves, there’s perhaps no bigger winner from the massive stroke of good fortune than their creditors. Just weeks ago many were staring at the possibility of significant losses as pandemic-fueled slumps had traders betting up the odds of default. Now the companies are suddenly in a position to raise fresh piles of cash to weather the storm, and could even use the funds to start paying down debt.
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