- AMC shares surged 36% yesterday.
- The gains this week surged to 120%.
- The company has taken over GameStop on being most loved channel on Reddit.
The shares of American movie theater chain, AMC Entertainment Holdings Inc (NYSE:AMC), surged 47% on Thursday, as speculative trading by Reddit-obsessed day traders spiked.
However, at the end of day’s trade, it closed at US$26.52 a piece – down 35.58%. With yesterday’s spike in prices, the week-to-date returns on shares have jumped to 120%.
The surge happened after a trending post on Reddit’s WallStreetBets chatroom Thursday said, “AMC rocket ship,” while another said, “invested all my savings into AMC!!! Wish me luck guys.”
The short covering would have helped in the surge in share price. Almost 20% float shares of the company are sold short, as against an average of 5% short in a typical US stock. These short sellers have lost US$1.3 billion this week, due to the rally in stocks.
Experts suggest that AMC has taken over GameStop to become the most favourite stock on the WallStreetBets Reddit forum.
The meme stock peer of the company – GameStop Corp (NYSE:GME) – witnessed a short squeeze of 400% in a single week in January – creating Wall Street record. Shares of GameStop were up a much smaller 4.8%.
Notably, the company has around US$5 billion in debt on its balance sheet and US$450 million in deferred lease repayments.
The company ended the March quarter with US$1 billion in liquidity, the highest level seen through the company’s century-old history. However, the experts suggest that this cash on hand will only keep AMC stay afloat through 2022.