Meme stock AMC Entertainment Holdings soared in premarket trading on Monday after a judge blocked the theater chain's stock conversion plan that risked diluting investors' holdings in the company.

The highly shorted AMC common shares were the most traded across all stocks trading before the opening bell at 05:58 a.m. ET, surging 59% to $6.99. Preferred shares "APE" fell 2.8% to $1.75.

The stock was trending on investor-focused social media stocktwits.com, indicating retail traders' interest.

A Delaware court judge said on Friday she cannot approve a deal that would potentially provide current shareholders with additional shares worth $129 million as it would also settle potential claims by preferred shareholders who were not represented in the lawsuit.

AMC investors had sued the company in February, alleging a plan to convert preferred stock to common stock was enacted to circumvent the will of common stock holders who opposed the issuing of new shares.

The company filed a revised petition for a stock conversion plan addressing the Delaware court's concerns over other shareholders, CEO Adam Aron said on Sunday.

The litigation is a roadblock for the company with high cash burn rate as it intends to pay down some of its $5.1 billion in debt by selling more shares and potentially avoid bankruptcy.

In a win for theater chains globally, the much-hyped movies "Barbie" and "Oppenheimer" drew crowds after sluggish ticket sales in June and July. Domestic ticket sales for all movies topped $300 million in the United States and Canada for just the fourth time in history, according to studio estimates on Sunday.

About 28% of AMC's free float shares are shorted, analytics firm Ortex estimated.

Some other favorites among retail investors also gained. GameStop rose 3.6%, while Koss Corp climbed 15%.

(Reporting by Medha Singh in Bengaluru; Editing by Krishna Chandra Eluri)