AMC triples as retail investor raid on hedge funds targets GameStop spreads



[ad_1]

Street performers in Minnie Mouse costumes walk past an AMC theater at night in New York’s Times Square neighborhood, October 15, 2020.

Amir Hamja | Bloomberg | Getty Images

Shares of struggling movie giant AMC Entertainment more than tripled in pre-market talks Wednesday amid a wave of trading activity in some of Wall Street’s shorter stocks.

AMC shares jumped 230% ahead of Wednesday’s opening bell, while GameStop rose 67%.

Individual investors create short pressures by piling on these names, while strapped hedge funds on the other side rush to cover their losses. They promote their business on the Reddit wallstreetbets board, which has 2.8 million members. CMA appears to be a topic of growing interest on the board.

The influence of retail investors – most evident in GameStop – has captivated the streets in recent days and speaks to a new class of traders who have grown up amid the pandemic.

“The spotlight has shifted from Large Cap Tech / ‘Retail Favorites’ to a largely overlooked corner of heavily shorted smaller cap stocks,” Barclays said Tuesday in a note to clients. “Within a month, retail had a significant impact on the price action and sentiment of these heavily bypassed names, further strengthening the dominance of retail options investors.”

AMC currently has 24% of its free float tied up in short interest. Meanwhile, GameStop’s short interest stands at 138%, according to FactSet.

AMC jumped 26% on Monday and 12% on Tuesday, taking its gain for the week after just two days to over 40%. On Monday, the company announced that it has secured enough funding to remain open and operational until 2021.

“This means that any discussion of impending bankruptcy for AMC is completely irrelevant,” said CEO Adam Aron.

Over the month, AMC shares are up more than 130%. However, given the stock’s decline over the past few years, a smaller gain, of course, now explains a much larger percentage move.

[ad_2]

Source link