Source: Hey Poor Player, Morning Wrap
The meme stock frenzy is back! It’s AMC’s turn now - it gained 35% last Friday, 190% last month, and more than 1,300% year to date… also heading to the moon?
Hold on 😶 who is AMC?
The full name is AMC Entertainment: it is one of the largest cinema chains both in America and globally. It’s also a meme stock - whose price is fueled by social media but not its financial performance.
As we can imagine, AMC just had a bad year due to lockdowns and social distancing requirements around the world... and it has been a perfect target for short-sellers (those who bet on shrinking share price through a sell-now-buy-later strategy).
- AMC’s short interest is approaching 20% - implying that 20% of its shares are in short positions… that’s extremely high vs. a normal of 5%.
Then… why did it go up like crazy?
That’s similar to Gamestop (GME) in Jan. - mainly driven by enthusiastic retail investors on Reddit and Twitter, following r/wallstreetbets and #AMCSTRONG.
- Squeeze those short-sellers out! The so-called “short squeeze” is back again. No reason, just want to squeeze them out after seeing the high-flying short interest.
- Shift back from Crypto to meme? The crypto frenzy in Apr. has finished, and maybe it’s time for many of them to “reallocate” their assets… or simply shift back to meme stocks.
- Maybe AMC’s business is picking up? 🤔 In early May, AMC held a conference call following their quarterly numbers, with an optimistic outlook as the American vaccination accelerates. Time to go to the cinema?
How did the short squeeze work? So far, so good. ✌️ Short sellers have been slapped with a USD 2 bln+ loss on AMC, and some of them have already closed their position.