AMC share price soars as Reddit investors encourage trading

Reddit traders who have successfully taken advantage of GameStop (GME) action are now turning to struggling movie channel AMC. Reddit’s r / wallstreetbets board helped push GameStop stock to record levels in recent days, with the stock closing 92% yesterday alone. It’s part of a chaotic, memes-fueled effort to create organized short pressure and force traditional hedge funds to lose millions of dollars on their bets against struggling companies.

AMC seems to be next on the list. Overnight, online traders on the r / wallstreetbets Discord server spent hours creating memes and spamming AMC emoji in an effort to convince thousands of people to buy AMC stock. Hundreds of people have taken to rapper Soulja Boy’s live Twitch stream in an unsuccessful attempt to get him to tweet on AMC. At one point during an ongoing Discord call – with dozens of attendees shouting racial name-calling and slurs – traders believed Elon Musk was on the call. After many called for calm and “let Elon speak,” everyone soon realized that he was just a prankster using a fake Elon Musk sound card.

It was a surreal moment in what has become the most popular online game.

AMC memes seem to work, however. During pre-market trading, AMC rose over 400% at one point before opening over 250%. The movie chain has struggled to cope with losses from the pandemic, but it raised more than $ 400 million in funding on Monday to help it stay afloat through 2021.

Crowds of investors take part in this high risk game in an attempt to punish hedge funds and professional financiers and make a quick buck. Thousands of people are embracing the idea of ​​hitting the pros on Wall Street and using Reddit, Discord, Twitter, and Twitch to sell more people to the gaming system.

It works by targeting stocks that have a lot of short selling attached, which is why GameStop and AMC are good targets after struggling during the pandemic. Short selling is a process that allows traders to borrow stocks for a fee, then sell them for a high price and buy them back for a lower price to return them. Reddit tries to force the price up so that investors, and especially hedge funds, who sell short lose a lot of money as the stock rises.

It’s a risky game that highlights a bigger battle over the future of finance and the idea that you can do it all online. The vast majority of Reddit investors are young and see hedge funds as the old school controlling stocks and stocks and intimidating companies in administration through their positions. As a poster on r / wallstreetbets put it, it’s “a standoff between tradition and the future” that has become truly personal. “We need to reclaim the wealth of these baby boomers,” said a Discord member calling for encouraging investment in AMC.

Investing and trading has also become incredibly easy for hobbyists, thanks to apps like Robinhood. Millions of people have used Robinhood to make commission-free transactions, and it’s a practice that became popular during the pandemic with millions stranded at home.

This online trading game also has real consequences. A large hedge fund, Melvin Capital, was forced to close from its GameStop position today with a huge expected loss, likely in the millions of dollars. It’s not clear if we’ll see the same sequence of events with AMC, but Reddit is trying to do just that.