AMC soars nearly 40% thanks to more Reddit love
Get your popcorn ready! It looks like the AMC stock surge sequel may be the feel good hit of the summer.
Shares of AMC soared about 36% Thursday as investors on the popular Reddit WallStreetBets board were once again touting the stock in an effort to hurt short sellers who have bet against the theater operator.
Investors have seen this movie before: Short sellers borrow shares of a stock and sell it, with the hopes of buying it back at a lower price and pocketing the difference before returning the shares.
But if good news — or in this case, a coordinated push to make the stock pop — causes shares to skyrocket, short sellers have no choice but to quickly buy back the stock or face gigantic losses. It’s a phenomenon known as a short squeeze.
AMC share prices, which rallied along with other popular meme stocks such as GameStop and BlackBerry that have been squeezed higher, have doubled in the past week alone and are now up more than 1,100% so far this year following a big pop in January.
Fans on Reddit were thrilled by the recent moves.
“AMC to Mars!!” wrote one enthusiastic Reddit poster on Wednesday.
“$AMC! Because people like to flex left and right in this group. Don’t sell! Make me money,” said another Redditor Thursday.
“Invested all my savings into AMC!!! Wish me luck guys,” wrote another investor on the WSB board Thursday.
AMC now has a market value of about $12 billion, even though the movie theater chain has been closed for most of the pandemic and is expected to lose money this year and next.
Analysts are forecasting that revenues will nearly double in 2021 and 2022, though, thanks to the reopening of many theaters around the country following last year’s shutdowns.
Other movie theater stocks have benefited as well, but not nearly as much as AMC. Shares of IMAX are up 25% this year. Cinemark has soared nearly 40% while Marcus has gained 56%.
