Mudrick reportedly bought the 8.5 million AMC shares it simply purchased

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Mudrick Capital sold all of its stock in AMC Entertainment for a profit, 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. The stock was last up about 19% and traded around $31 per share.

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 hit a high of $33.53 per share, meaning the Mudrick 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.

AMC noted in its securities filing Tuesday that one risk factor for investors is that the stock could be considered overvalued.

“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.