Meme stocks played role reversal with AMC Entertainment’s AMC,
Individual investors showed a frothy interest in AMC all day as users on Reddit and Twitter push an #AMCSqueeze hashtag, and mentions of the stock overall dominated the discussion among retail traders on Thursday.
“We didn’t wait this long for these puny numbers.. the concept you must understand : SHORTS MUST COVER, WE OWN THE FLOAT!” read one popular post on Reddit board r/amcstock.
By 2pm ET, trading volume on AMC was already the highest it has been since March, and while talk of a squeeze was pervasive,
AMC’s stock has responded, popping more than 16% in early trading and then moving up again on news that the company had completed its previously announced 43 million shares at-the-market equity offering, bringing in $438 million of fresh capital to the beleaguered theater chain.
According to Dow Jones data, AMC’s 23.74% rise was its largest one day % gain since Jan. 29, 2021 when it gained 53.65%
Analysts offered an evenhanded appraisal of AMC’s day.
“Retail demand for AMC shares continues to elevate the share price, and it is trading at a multiple unrelated to the company’s fundamentals,” said Wedbaush’s Alicia Reese. “That said, AMC is smart to capitalize on the retail interest and sell its shares at an inflated price tag, particularly if it uses the funds to reduce its debt.
Reese, who was clear that the share sale was already baked into her Hold rating on the stock, gave investors who see AMC as undervalued comeback/growth story some positive news.
“The faster it can reduce its debt, the faster it can return to its previous growth strategy of upgrading its European circuit and expanding in the Middle East,” she added.
GameStop, which usually plays the Alpha to AMC on the meme stock power ladder, also pumped higher on the day, sparing 13.61%, but many on social media platforms who see the videogame retailer as a value play were frosty towards the idea that they were also engineering another squeeze on AMC’s coattails.
“Amc is FUD and has nothing to do with us,” posted one user on r/Superstonk, a board dedicated to GameStop investors and using the pejorative acronym for “fear, uncertainty and doubt.
