Mudrick Capital sold all of its stock in AMC Entertainment, according to a new report from Bloomberg News.
On Tuesday, AMC had disclosed the $230.5 million investment in a securities filing posted before the opening bell. Shares of the company rose as much as 22% on the news. AMC has become a favorite of traders on Reddit and has seen wild swings in recent months.
Bloomberg is now reporting that Mudrick sold off all of its shares Tuesday for a profit.
Representatives for Mudrick did not immediately respond to CNBC’s request for comment.
Mudrick had purchased 8.5 million shares at $27.12 apiece, according to AMC’s filing. The company’s stock stock rose as high as $32 per share on Tuesday afternoon, meaning the firm could easily have gained more than $40 million on the rally.
According to Bloomberg, the decision to dispose of the stake came after the firm concluded that AMC’s stock was overvalued.
Even AMC has admitted the company’s stock is not trading based on its fundamentals.
“Our market capitalization, as implied by various trading prices, currently reflects valuations that diverge significantly from those seen prior to recent volatility and that are significantly higher than our market capitalization immediately prior to the COVID-19 pandemic,” AMC executives said in Tuesday’s SEC filing.
“And to the extent these valuations reflect trading dynamics unrelated to our financial performance or prospects, purchasers of our Class A common stock could incur substantial losses if there are declines in market prices driven by a return to earlier valuations,” the filing said.