AMC Party Trends on Twitter, Stock Inches Closer to USD 50

Meme stocks are on the comeback trail after giving retail investors a cause for worry this week. Shares of AMC Entertainment are up about 13% today following a rocky week in which the stock fell from its perch of USD 55 to below USD 50. Now it is racing toward the USD 50 threshold once again.

Options Party

Investors are shaking off the week with a Twitter campaign that is catching on called hashtag “AMC Party.” Their happy mood seems to be spilling over to the stock headed into the weekend, with shares of AMC seeing green along with its meme stock peers.

In particular, the Reddit investor crowd seems to be focused on June 18 for call option expirations. In early June, traders reportedly poured more than USD 11 billion into AMC-related options contracts. One trader who goes by “MartyParty” on Twitter and who has amassed more than 21K followers said he “bought another AMC call option for June 18 USD 243.”

Short Potential

The meme stock crowd has been growing lately with some new names. AMC remains one of the most promising, however, for the WallStreetBets crowd from which it got its fame. According to fintech company S3 Partners, the movie chain has boasted what’s known as a “squeeze score” of 10 out of 10.

In fact, the firm revised its model from a range of 1-10 to a range of 1-100. Even with this wider scale, AMC alongside GameStop and Clover Health all score 100. By way of comparison, Tesla stock has a squeeze score of 23 out of 100. In dollar terms, AMC stock has short interest of USD 3.4 billion attached, according to S3 Partners’ Ihor Dusaniwsky.

Individual investors are looking to put the squeeze on sophisticated traders like hedge funds. They have already been quite successful, costing hedge funds billions of dollars in losses this year in market rallies led by the likes of AMC and fellow meme stock leader GameStop.

Now retail investors are hoping for a chance to amplify their gains further with a short squeeze at the traders’ expense. In this case, the traders, who are betting on the stock’s decline, would have to cover their short positions by buying shares of the stock. This is the Holy Grail for the WallStreetBets Reddit crowd.

AMC Investors Hit Sell Button amid Meme-Stock Meltdown

Meme stocks are having a tough day, and AMC Entertainment is among the hardest-hit names. Shares of the movie chain are down nearly 13% amid a sell-off in the entire group today.

After AMC shares traded as high as USD 62.55 in early June, they have since proceeded to give back ground as investors watched 30% get shaved from the stock’s value.

Short Interest Persists

Short selling activity in AMC remains robust , with short interest hovering at 102.3 million shares as of May 28, as per exchange data cited by financial analytics firm Ortex. The short interest surpassed expectations considering that traders have lost billions of dollars to the WallStreetBets movement as retail investors have gained the upper hand.

With the latest exchange data, AMC’s short interest is estimated to be 12.7% of the stock’s free float, according to Ortex. Short interest in AMC has been as high as 18% recently.

Insider Selling

A couple of significant AMC investors have decided to profit from the latest meme stock craze and cash in some of their holdings. Among them, Howard Koch Jr., the producer of popular flicks including Wayne’s World and Primal Fear, has unloaded more than 14,000 shares in recent days, an SEC filing reveals.

After selling shares at an average price of USD 55.34, he saw a payday of more than USD 790K. Koch, who is also known as Hawk, still owns tens of thousands of shares in the movie stock. Before this month, he hadn’t hit the sell button on the stock in half a decade.

In addition, there was some insider selling. AMC HR executive Carla Chavarria parted ways with more than 40,000 shares of her employer’s stock at an average price of USD 62.67. She took home USD 2.5 million.

Meme Stock Meltdown

Selling today isn’t limited to AMC and has spilled over into several meme-stock names, even the newer ones. GameStop shares are down an eye-popping 20% after the company’s earnings report left investors wanting greater transparency on the rest of the year. BlackBerry, Clover Health and Wendy’s are also under pressure today.

As long as the broader stock market remains stuck in its current narrow range, however, the meme stock’s glory days are likely not over yet as investors hunt returns, according to OANDA senior market analyst Edward Moya.

 

Recent Retail Flows Into Meme Stocks Hit January Peak Levels – Vanda Research

Meme stocks have received $1.27 billion of retail inflows in the past fortnight, matching the peak in January, when retail traders piled into video game retailer GameStop Corp in an attempt to drive up the share price and punish short sellers by forcing them to cover their positions at big losses.

Meme stocks are companies that see their value fueled by social media attention.

At the height of the trading mania, several retail brokers restricted the buying of GameStop after collateral requirements needed to clear the trades spiked, angering many traders and spurring congressional hearings and regulatory probes.

The latest surge comes as individual traders in online discussion forums, such as Reddit’s WallStreetBets, have pumped up shares of companies including Clover Health Investments Corp, GameStop and AMC Entertainment Holdings.

The amount of cash flowing into meme stocks has been larger than any single sector or industry, even surpassing the S&P tech sector, according to Vanda, which tracks retail flows.

What sets these meme stocks apart, “is that they are absolutely hated by the hedge fund community, who have been piling into short bets for some time,” Vanda researchers said.

Sectors currently seeing higher retail participation include cannabis stocks and gaming stocks, while electric vehicle and space exploration companies, as well as cryptocurrencies have seen waning retail interest, Vanda said.

(Reporting by John McCrank; Editing by Bill Berkrot)

Clover Health is the Next Stock Getting Attention on Reddit

Day traders on Reddit have pumped numerous stocks over the past few months. They have now turned their attention to Clover Health, with the company’s stock rising by over 100% at some point today.

Reddit traders turn to Clover Health

Reddit traders have been responsible for pumping a few stocks over the past year. The GameStop stock rally gained popularity and was covered by major news outlets globally. However, the day traders on Reddit also pumped other stocks, including AMC, despite the company taking a hit due to the closure of public places because of the pandemic.

The traders have now turned their attention to Clover Health. The company’s shares went up by over 100% earlier today. Shares of Clover Health, a Medicare insurance start-up that went public through Chamath Palihapitiya’s SPAC, rallied by 100% earlier today. This comes after recording a 32% surge in stock price yesterday.

At the time of this report, the company’s stock price is trading at $19.65, up by 65% over the past 24 hours. At the start of the US trading session, 300 million Clover Health shares were trading in the market, up by 13 million from yesterday. Its daily trading volume is also higher than the 30-day average volume of 22 million shares.

Clover Health’s stock price has been rallying thanks to the attention it has received from Reddit’s WallStreetBets forum. The forum now has over 10 million participants, and it is one of the largest gathering of day traders in the world.

Reddit users favor broken businesses

The Reddit day traders seem to favor struggling businesses and pumping their stock prices higher. It began with GameStop towards the end of last year, with the company struggling to stay afloat. The traders pumped its price by hundreds of percentages.

AMC price chart. Source: FXEMPIRE
AMC price chart. Source: FXEMPIRE

This was followed by AMC. The theater chain took a hit following the closure of public places due to the pandemic. AMC had to sell some of its assets to settle some debts. The traders pumped AMC’s price, with the stock rising by 110% in June alone.

The traders are also focusing on another stock. Wendy’s is up by 15% so far today, and it could rally higher if more people enter the market.

Meme Stock Bulls Take Back Control as Hedge Fund Battle Rages

After a wave of selling heading into the weekend, retail investors have wrestled back control of their favorite shorted stocks, including AMC Entertainment and GameStop. The stocks are off their highs of the day, and retail investors are convinced that something shady is going on.

Short sellers are swinging back after losing USD 2.2 billion from AMC’s rally last week. There are theories of traders pulling out all the stops — including the illegal practice of naked shorting, which is currently trending on Twitter.

Double-Digit Percentage Gains

Shares of AMC have galloped 16% today but still failed to cross the psychologically important USD 60 level, where the movie chain stock closed above on June 2 for the first time. While AMC might be off its peak, investors don’t have much to clamor about considering that the stock has skyrocketed more than 467% since early May.

Fellow WallStreetBets stock GameStop is tacking on close to 11% in today’s session. The stock has gained more than 1,400% year-to-date for a market cap of USD 19.4 billion. GameStop investors have proven to be a loyal bunch as it hasn’t always been easy to hold. But those who have stuck around continue to be rewarded with more potential runway for gains.

Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners, revealed in a tweet that GMC and AMC each have a short squeeze risk score attached of 10 out of a possible 10.

Source: Twitter

Naked Short-Selling

Meanwhile, the WallStreetBets crowd has taken over Twitter, with #nakedshorting trending on the social media site. To be clear, unlike regular shorting, which is legal, naked selling is not legal. It has to do with selling shares that have not been issued yet. Nonetheless, it still happens in the market.

Naked shorting is how 140% of GameStop’s float can have short interest, as pointed out by Charles Payne on Fox Business. Christian, Smith & Jewell Law Firm Attorney Wes Christian said he blames the prime brokers that are custodying the assets as well as market makers for this behavior.

The meme stocks have captured the attention of regulators, who say that they are monitoring the market for any manipulation and that they are looking to “protect retail investors.”

In the interim, retail investors appear to have hedge fund traders on the defense. Interactive Brokers Chairman Thomas Peterffy has some advice for them: don’t short meme stocks or you’ll come out on the losing side of the bet. He said stocks such as AMC have the potential to reach “unimaginable highs” that can leave traders holding the bag.

AMC Jumps 19% as Funds Eye Bearish Bets

Market participants have told Reuters that some Wall Street institutional investors are ramping up complex options trades that let them bet the shares will fall while keeping a lid on potential losses if they instead gain.

Cinema operator AMC Entertainment Holdings, which almost doubled in value again last week, rose 18.5%, while Microvision, a developer of laser beam scanning technology, climbed 7.1%.

Data shows AMC has been the top traded stock among clients of brokerages Fidelity and Freetrade, used heavily by amateur and individual investors playing with their own money.

On trading-focused social media site Stocktwits, message volume related to AMC – a barometer of interest in the stock – rose 3.3% on Monday.

Among other meme stocks, BlackBerry’s U.S. listing was up 8.6% and videogame retailer GameStop Corp and headphones maker KOSS rose 6.6% and 12.1%, respectively.

(Reporting by Aaron Saldanha in Bengaluru; editing by Patrick Graham and Saumyadeb Chakrabarty)

Exclusive-Some on Wall Street Try Options Trade to Bet Against Amc Without Getting Burned

By Matt Scuffham and Saqib Iqbal Ahmed

A Reuters analysis of options data and interviews with market participants, including a Wall Street banker and a fund manager with $30 billion in assets, show that some institutional investors have ramped up complex options trades that let them bet the shares will fall.

The so-called “bear put spread,” a common bearish options strategy, also limits profits.

Its increased use now, which has not been previously reported, shows how Wall Street is looking for ways to profit off the unprecedented rise of retail trading but treading carefully after some high-profile funds got buffeted earlier this year.

“It’s still dominated by these small retail trades for sure, but we are seeing sporadic big institutions tempted in just by the pricing,” said Henry Schwartz, head of product intelligence at Cboe Global Markets Inc, referring to options trading in AMC.

AMC has been at the center of a second wave of buying by retail investors who have been hyping the stock in forums such as Reddit’s WallStreetBets, giving new life to the “meme stock” phenomenon that sent shares of video game retailer GameStop Corp up 1,600% in January.

AMC’s stock rose just over 83% this past week. The stock has surged 2,160% this year, leaving traders with outright bets against it nursing paper losses of nearly $4 billion, according to the latest available data from S3 Partners.

When a stock moves as much as AMC did last week – at times more than doubling in price in the course of a single trading session – it drives up the price of options.

Typically moves of that magnitude don’t persist for extended periods of time, and some professional traders are betting that will be the case this time, meaning the stock price will fall, market participants said.

The problem is, they don’t know when that might happen and whether they have the resources to stand their ground in an extended face-off with retail traders, whose power lies in their numbers.

That’s where a bear put spread comes in. In the trading strategy, the investor buys one set of put contracts, which gives them the right to sell the underlying shares at a certain “strike” price by a certain time, and sells another set with a lower strike price valid for the same time frame.

The sale of the put options offsets most of the upfront cost of buying the first set of contracts. If the shares don’t fall, or fall less than anticipated, the trader’s losses from the put purchase will be covered to a large extent by the proceeds of the sold put.

The banker, a senior executive at a major Wall Street firm, said the majority of his institutional clients were staying away from meme stocks, but some had started using bearish put spreads to bet against them. The fund manager, who is based in New York, said he was using put spreads to both minimize his risk and reduce costs as he bet on AMC and other meme stocks.

Both requested anonymity because they were not authorized to speak to the press.

Options trading data shows increased complex trades that involve strategies such as put spreads. Such trades, typically favored by professional traders, made up 22% of daily AMC trades, on average, this week, up from 13% for the month of May, according to options analytics firm Trade Alert.

Overall options trading in the stock remains overwhelmingly driven by retail traders, the data shows. Only about 10% to 15% of overall daily AMC options volume this week was traded in blocks of over 100 contracts, a size typically associated with professional players.

“It’s hard for institutions to stay away when volatility gets this high,” Cboe’s Schwartz said. “They try to avoid it, but it does draw them in.”

(Additional reporting by Sinead Carew; Editing by Paritosh Bansal and Sonya Hepinstall)

Wall Street Bets: Meme Stocks AMC, BB Take Investors on Roller Coaster Ride

Investors have gone along for the ride, vowing to hold on until they put the final nail in the coffin of short-sellers.

Despite the volatility, shares of AMC Entertainment, in particular, have already almost doubled in price this week despite Thursday’s decline of close to 20%. AMC appears to be the tide lifting the meme-stock boat as other names including MicroVision, BlackBerry, Bed Bath & Beyond, Koss Corp and GameStop have either flipped green or are off their lows of the day.

Mixed Signals

Wall Street analysts are doing the best they can keeping up with the WallStreetBets movement, which has seen individual investors gain influence in the stock market rally. Most recently, Wedbush Securities has shown its true colors, which apparently is a gray area. After shares of AMC touched on USD 60 this week, the firm lifted its price target on the stock by USD 1 to USD 7.50. At the same time, however, Wedbush analyst Alicia Reese also suggested a “justified price target” would be “as high as USD 10,” saying in a report,

“AMC has made the best of its current ‘Meme Stock’ status by selling shares at a premium, and has raised significant capital doing so.”

BlackBerry or Bust

Another meme stock that is getting a lot of attention lately is BlackBerry. In the month of June so far, BlackBerry, the company behind the physical mobile keyboard that is making a comeback, is up nearly 30% to USD 15.

The stock is coming off its strongest trading day ever based on trading volume after 528 million shares changed hands on Thursday, as per FactSet data cited by Barron’s, compared to today’s 104 million in volume as of midday today. For context, BlackBerry’s trading volume has only surpassed the 200 million threshold on eight separate occasions since the stock started trading.

BlackBerry is trading below its highs of the year, since soaring to nearly USD 29 in January 2021, its highest level in a decade. After seeing what they could do to GameStop and AMC, the WallStreetBets crowd is reaching for the stars with BlackBerry, with visions of the company becoming the next Apple dancing in their heads.

For a look at all of today’s economic events, check out our economic calendar.

Why BlackBerry Stock Tanked After Testing The $20 Level

BlackBerry Video 03.06.21.

BlackBerry Stock Opened With A Big Gap Up As Traders Remained Focused On “Meme Stocks”

Shares of BlackBerry tested the $20 level during today’s trading session after a strong upside move on Wednesday as the trade in “meme stocks” continued but lost momentum and pulled back below the $15 level.

Traditional leaders of the “meme stock” movement, GameStop and AMC, were moving lower today as traders took profits after the recent rally which was especially strong in AMC’s case.

At the same time, it looks that traders are moving funds into other stocks with high short interest like GTT Communications. It remains to be seen whether this recent trend will be sustainable, but it is clear that traders should stay away from shorting highly-shorted names as other retail traders are constantly searching for the “new GameStop”.

What’s Next For BlackBerry Stock?

AMC has recently issued an 8-K filing in which it warned investors that they could lose “all or a substantial portion” of their investments. AMC also noted that recent valuation levels were significantly higher than the levels seen immediately prior to the pandemic, and that current valuation levels reflected trading dynamics that were unrelated to the company’s financial performance or prospects.

This warning put pressure on AMC shares and also triggered selling in some of the recent high-flyers, including BlackBerry stock.

Analysts expect that BlackBerry will report a loss of $0.05 per share in the current year and turn to a profit of $0.06 per share in the next year. In this light, the stock is trading at 242 forward P/E (the stock price at the time of writing is $14.50) which means that BlackBerry shares remain far away from reasonable valuation levels.

If the current sell-off in “meme stocks” continues, BlackBerry stock can easily return to recent levels below $10 as it remains grossly overvalued near the $15 level.

For a look at all of today’s economic events, check out our economic calendar.

Investors Blame Ladder Effect for Meme Stock Sell-Off

The AMC pullback, however, comes on the heels of Wednesday’s blockbuster session in which the stock ballooned to a new peak of USD 62.55, bringing the market cap to above USD 30 billion at one point. AMC’s market cap has since retreated to USD 22 billion. Tuesday’s rally in AMC and Gamestop shares cost short sellers more than USD 750 million, according to Ortex data cited by Reuters.

AMC management shook things up a bit today by filing to sell as many as 11.5 million shares as the movie chain looks to shore up the balance sheet. Despite cashing in on the bull run, in the filing, AMC also issued a warning, saying,

“Our current market prices reflect market and trading dynamics unrelated to our underlying business…or industry fundamentals.” The company says it isn’t sure how long this situation will persist.

If you ask retail investors who want to upend hedge funds, however, today’s sell-off of 20% and counting in AMC shares is nothing more than a “short attack.”

Meme Stock Ladder Attack

The selling has taken place not only in AMC but across meme-themed stocks, leading retail investors to conclude that it is a “coordinated ladder attack” on the part of sophisticated traders. So far today, shares of GameStop, which is another highly shorted stock, are down 7%. Fellow meme stocks Koss Corp and Bed Bath & Beyond are down 20% and 24%, respectively. MicroVision shares are down a more modest 3.%. Shares of BlackBerry, another target of the WallStreetBets crowd, are bucking that trend and throwing cold water on the narrative, with the stock rising by nearly 19%.

Retail investors on the famous WallStreetBets Reddit forum say they are “holding the line” on AMC and maintain that the real short squeeze has not even occurred yet.

Wild Wall Street

Wall Street analysts are caught up in the meme stock whirlwind. According to StreetInsider.com, Jefferies has now halted short selling in meme stocks AMC, Gamestop and MicroVision.

Source: Twitter

In addition, Loop Capital’s Alan Gould has once again issued an ominous warning on AMC’s stock, saying that shares are “massively diluted and “over-levered.” He warns that the movie industry is suffering from fewer releases and a more compelling streaming market in a post-pandemic world.

According to Gould, AMC’s valuation will eventually catch up with the fundamentals, as Wall Street continues to take aim at the meme stock crowd. Something is sure to give eventually, though in which direction remains to be seen.

Analysis-with Popcorn and Tweets, AMC’s Aron Rides Retail Investor Wave

By David Randall and Sinéad Carew

NEW YORK (Reuters) – Free popcorn for shareholders. Following more than 500 die-hard fans of his company’s stock on Twitter. Retweeting a video of what appears to be an airplane flying a banner with the meme-stock rallying cry “AMC to the Moon” around Manhattan.

Welcome to the world of AMC Entertainment Holdings Inc Chief Executive Adam Aron, who since the beginning of the year has taken to new heights the role of chief promoter of a company that was on the brink of bankruptcy.

At a time when many on Wall Street argue that the movie theater operator is over-valued and in dire need of an accelerated economic recovery from the coronavirus pandemic to justify its share price, Aron, 66, is leaning in to the growing power of individual investors to keep so-called meme stocks surging.

“Watch out naysayers, AMC is going to play on offense again. Here we come!” Aron wrote in a June 1 tweet https://twitter.com/CEOAdam/status/1399683077660721152.

He has been riding a wave of enthusiasm for the stock. AMC shares are up nearly 3,000% since the start of the year and almost doubled on Wednesday to close at $62.55 a share, way above the average target price of $5.11 among Wall Street analysts, according to Refinitiv data. AMC is now valued at $28.2 billion, based on Wednesday’s closing price.

Aron, who became CEO in 2016 after running the National Basketball Association’s Philadelphia 76ers, started promoting AMC after its shares were swept up in a retail buying frenzy in January.

AMC did not respond to a request for comment, and Aron did not reply to a direct message on Twitter.

Aron is part of a growing number of executives on Wall Street such as Tesla Inc’s Elon Musk and the incoming chairman of GameStop Corp, Ryan Cohen, who appear to be doing more to court retail rather than institutional investors.

“These individual investors likely own a majority of our shares,” Aron said during the company’s May earnings call. “They own AMC. We work for them. I work for them.”

Some analysts are skeptical that such showmanship will bolster AMC’s share price long-term. There are no actively managed stock funds among the company’s 20 largest shareholders, according to Refinitiv data, leaving open the risk that a shift in retail investor opinion could quickly sink its shares.

“The Twitter horde love him. He’s playing to the crowd and it’s working,” said MKM Partners analyst Eric Handler, who questioned AMC’S stated strategy of issuing new shares to raise capital. “He’d be better off improving the balance sheet and providing some stability for the business,” he said.

Michael Pachter, an analyst at Wedbush Securities, said that selling enough movie tickets and popcorn to justify a $40 share price for the company – where it was trading early on Wednesday – would require that revenues nearly double from his 2022 estimates of $322,000 per screen from movie tickets and $6 per person in spending on food and drinks.

“It’s hard to understand why AMC would perform at double its historical average,” he said.

Aron, whose career includes a decade as chief executive of Vail Resorts Inc and a stint leading Starwood Hotels and Resorts Worldwide Inc, focused more of his attention on connecting with consumers rather than retail shareholders in his previous executive roles.

At the 76ers, for instance, he was part of a charge to cut ticket prices, while at Vail Resorts he was instrumental in expanding the company into a nationwide business. Shares of the company fell nearly 4% when he announced his resignation in 2006.

Promoting a company’s shares to retail investors may be the new reality for many companies, said Jim Paulsen, chief investment officer at the Leuthold Group.

“CEOs have always been showmen and a big part of what they do is put on shows for institutional investors,” said Paulsen. “You may have a Reddit group that is the focus of the tweet but the reality is institutional guys like me are going to hear about it just as quickly.”

(Additional reporting by Krystal Hu; editing by Megan Davies and Leslie Adler)

Another Victory For Retail Traders As AMC Price Blasts Off

AMC follows GME to the heavens as retail traders flex their muscles while pushing institutional-level players to the sidelines.  It is a true David vs. Goliath story where the impossible is possible.

To The Moon?  Maybe?  But What About The Landing?

We’ll start off with this 10 Minute AMC chart that shows two incredible rallies over the past 72 hours.  The first, a +42% rally from $32 to $45, and the second, a +65% rally from $36 to $62 as day traders and retail traders drove AMC to incredible highs (over 100% higher) in just 3 days.

What is happening with these price swings is that a group of retail and other traders are piling into a selected symbol and attempting to force a short squeeze in larger institutional level accounts.  As the price moves higher, big money often comes in to short these symbols if fundamentals and earnings don’t support the valuation.  Yet, when the tide of retail buyers is never-ending and they lock up their shares with sell limit orders well above the current market price, this locks out the shorts (in some form) – pushing the squeeze into hyperdrive.

YOLO! Blow Up? Blow Out? Who’s Left Holding The Empty Bag?

The Daily AMC chart below shows the incredible +560% rally that has taken place in under 30 days.  Just like what we saw with GME, this rally has moved into a parabolic phase with price levels now well above $45 to $55 per share.  When you consider AMC was trading below $8.00 per share just 4 months ago and is just now starting to regain some revenue after opening in theaters in many states, one has to ask a simple question…  Who’s left holding the bag when this is all over?

I remember seeing the posts on Reddit from retail traders that had lost fortunes after the GME rally collapsed.  I remember reading about that one young man that took his own life after amassing a +$700k margin debt on Robinhood.  As much as one has to sit back and wonder in amazement at this rally in AMC – I keep asking myself “who’s going to walk away from this holding a huge loss when this is all over?”.

Maybe that is the YOLO plan for many of these traders.  It is not about wealth preservation or consistently trying to find suitable gains in a wild market.  Maybe it is about living the experience – no matter what the costs and risks are.

I congratulate those retail traders involved in this rally and we hope to urge you to take your profits and be satisfied with these incredible rallies.  There is nothing wrong with pulling off enough to cover your initial investment (or more) when you want the symbol to skyrocket like AMC has.

Additionally, I urge all active traders to consider the longer-term game plan when you start to get serious about trading and investing.  My team and I like the “slow and easy” approach to trading where we target momentum-based trends while the markets support rising price levels, use position-sizing to our advantage, and attempt to limit downside risks.  In our opinion, staying alive and protecting our trading account is more important than these “flash-rallies” and the risks that come with this style of trading.

We’ve all heard stories about the traders that turned $2500 into $250k, then lost it all on a couple of dumb trades.  That is a very important lesson to learn in this industry.  Especially when data shows that more than 60% of active traders blow out their accounts within three years of trading.

Having said that, our options trading specialist has unique and fresh ways to play price and volatility spike in AMC shares. Watch this video for some ideas.

Please take a minute to learn about my BAN Trader Pro newsletter service and how it can help you identify and trade better sector setups.  My team and I have built this strategy to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

Enjoy the rest of your day!

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

 

WallStreetBets Does Victory Lap as AMC Crosses USD 40

Shares of AMC Entertainment have reached a second milestone in as many weeks, surpassing the USD 40 level after more than doubling to USD 30 a week ago. Mudrick Capital just bought 8.5 million shares of AMC only to turn around, deem them “overvalued” and dump them right after, according to the latest reports. Investors are piling in the stock anyway, sending a signal to the investment firm that its muscle isn’t needed.

The Wall Street Bets forum on Reddit, which is responsible for rallying individual investors around AMC and other highly shorted stocks in a move to upend sophisticated traders, is filled with members celebrating and spreading their share of FOMO. They are urging each other to get in before the price goes to USD 100. Considering the stock is already up 2,000% this year, that would be an amazing run-up though it’s unclear how sustainable that would be. The nearest precedent is GameStop, whose shares have advanced roughly 1,400% YTD thanks to the same WallStreetBets effect.

Options Activity

Meanwhile, Market Rebellion, which is run by brother traders Jon and Pete Najarian, tweeted that there was some “bearish” and “unusual activity” in AMC stock, with “7,000 June USD 31 puts bought in one print for USD 5.55 above open interest of 1,313 contracts.” Either that options trader knows something that the market doesn’t or they are about to fuel more gains in the stock. Bearish moves like this seem to unite the meme-stock crowd even more, which continues to ride the AMC wave for all its worth. So far, there are 1.35 million AMC contracts traded, 64% of which are calls and the balance of which are puts, according to Roensch Capital, which the firm described as “bull heavy.”

BB Bandwagon

On the flip side, call prices in Blackberry, another stock that Reddit members on the WallStreetBets platform are targeting, are on the rise today. Last Friday, Market Rebellion found that “5,000 weekly USD 10 calls expiring this Friday, Jun. 4, were bought for USD 0.11 to USD 0.31 above open interest of just 1,152 contracts with shares at USD 8.77.” Now those calls are trying higher by USD 3.25, more than 10x the purchase price, while the stock is up 10%.

WallStreetBets is getting expensive for some short-sellers to tango with.

For a look at all of today’s economic events, check out our economic calendar.

Amc Courts Reddit Crowd Again After Hedge Fund Share Deal

By Aaron Saldanha and Devik Jain

Mudrick Capital Management bought 8.5 million new AMC shares for $230 million on Tuesday before later selling them at a profit, according to a source, a bold move by the fund and the company to cash in on the retail-driven surge in its stock.

Other institutional traders continued to pour scorn on rises in so-called “meme stocks”, which also include GameStop Corp and BlackBerry Ltd, but shares in all three continued to gain in trading before the bell.

“It’s not rational, but do not bet against it,” said a Berlin-based trader.

AMC has been among the biggest gainers from a vigorous market battle since January involving both hedge funds and a new generation of social media centric small-time traders.

On Wednesday, the company launched a new scheme that offered even the smallest investor a free large popcorn if they signed up to a regular newsletter.

“Even if our shareholders now number in the millions … these people are the owners of AMC, and I work for them,” Chief Executive Officer Adam Aron said.

AMC’s stock has surged more than 1,400% this year and, at nearly $40, is trading at more than 10 times the median analyst price target.

The number of messages related to AMC on trading-focused social media site Stocktwits rose more than 7% on Wednesday, with most of them reflecting a positive sentiment.

Daily trading volumes in AMC have reached their highest since January in the past week, according to Refinitiv Eikon, while data from Fidelity showed it was the platform’s most traded share.

GameStop was up 1% in premarket trading, while Koss Corp jumped 7%. BlackBerry’s U.S.-listed shares were last up 17%, bringing their total yearly gains to more than 75%.

(Reporting by Sagarika Jaisinghani, Aaron Saldanha and Devik Jain in Bengaluru and Thyagaraju Adinarayan in London; Editing by Sriraj Kalluvila, Shounak Dasgupta and Patrick Graham)

Goldman Downgrades Imax to ‘Sell’

Goldman Sachs downgraded theater chains Imax Corp. (IMAX) and Cinemark Holdings Inc. (CNK) to ‘Sell’ on Wednesday, just one day after momentum favorite AMC Entertainment Inc. (AMC) soared 22% to an all-time high. Speculators scooped up shares after the company raised $290 million in cash in a sale to a hedge fund, securing their 2021 financial position. A great weekend box office underpinned the rally as well, with some receipts returning to 2019 levels.

Speculative Interest Dries Up

Imax held up better than Cinemark during the crisis, with a few brave souls focusing limited entertainment dollars on big budget productions. The chains continued to attract strong speculative interest heading into 2021 but upticks stalled in the first quarter due to valuation concerns. Imax lifted into a stronger technical position during the rally, completing a 100% retracement into horizontal 2017, 2018, and 2019 highs in the mid-20s.

Goldman analyst Michael Ng offered mixed commentary with the ratings, noting “Although there’s been a secular decline in movie-going, attendance declines are happening at a very slow place, declining 1.4% CAGR from the 2002 attendance peak to 2019. In fact, the box office has grown at 1.3% CAGR over that same time period as increased ticket prices have more than offset attendance declines. That said, we believe the closures of theaters during the pandemic may have accelerated the secular decline in attendance.”

Wall Street and Technical Outlook

Wall Street consensus on Imax now stands at an ‘Overweight’ rating, based upon 7 ‘Buy’, 2 ‘Hold’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $18.60 to a Street-high $30 while the stock will open Wednesday’s session just $3 above the low target. This weak placement suggests that Main Street investors generally agree with Goldman that movie stocks won’t offer strong returns for the rest of 2021.

Imax posted an all-time high at 43.80 in 2015 and turned sharply lower, dropping to an 11-year low in March 2020. It recovered at a steady pace into March 2021 when the stock reversed within two points of resistance in the mid-20s and fell six points.  Price action since that time has been stuck in a trading range with support at 20 while accumulation has held just below the first quarter peak. A positive catalyst could save the day with this configuration, breaking the resistance and lifting price into the 30s.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

WallStreetBets Emboldens AMC Despite Long-Term Uphill Battle

After taking a breather on Friday, AMC Entertainment and GameStop are both seeing double-digit percentage gains as investors return for more.

AMC has shot back above the psychologically significant USD 30 level, rising 20% on the day, while GameStop has added more than 10% to USD 244. After AMC’s stock more than doubled last week on robust volume, it has proven that there is more runway for gains.

AMC Flexing Its Muscle

The movie chain is seemingly emboldened by being the object of WallStreetBets’ affection and is flexing its muscle. AMC has attracted USD 235.5 million to its coffers in equity thanks to Mudrick Capital Management, which is buying 8.5 million shares.

Despite getting the brunt of the pandemic-fueled lockdowns, AMC sees brighter days ahead and plans to direct the proceeds from the stock sale toward making acquisitions, remodeling its movie theaters and strengthening its balance sheet. AMC CEO Adam Aron said in an SEC filing that the company is back on the offensive now that the population is getting vaccinated and “blockbuster new movie titles” are in the pipeline. If last weekend was any indication, Aron could be onto something. “A Quiet Place Part II” is expected to have generated USD 58.5 million in movie ticket sales compared to “Cruella’s” USD 26.5 million. Not everyone is impressed, however.

Bucking the Trend

An analyst at one Wall Street firm, Loop Capital, isn’t believing the hype. Loop’s Alan Gould has reiterated his sell rating on AMC, saying “the stock does not reflect fundamental value.” He has a USD 1 price target on the stock and points to “steadily declining” attendance at movie theaters since the turn of the century.

For the long term, movie stocks can trade at 7.5 forward EV to EBITDA on average, Gould explained. He said if AMC chief Aron were to issue 100 million shares at the current price, Loop’s USD 1 target would only increase to USD 5. He doesn’t fault CEO Adam Aron for riding the wave and issuing shares at the current price, however, noting that the number of shares it has left to sell is dwindling.

For a look at all of today’s economic events, check out our economic calendar.

AMC’s Stock is up by 17% as Company Sold More Shares

AMC Entertainment’s stock price surged today at pre-market trading as the company sold more than 8 million of its shares to investors. Despite the company’s stock price rising, the latest move further shows that AMC’s struggles are far from over.

AMC’s stock soars by 17%

The shares of theater chain AMC surged by roughly 17% earlier today, crossing the $30 mark at Tuesday’s pre-market trading session. The company’s stock price went up after it sold over 8 million shares to Mudrick Capital Management, raising $230.5 million in the process.

According to the company, the funds would be used for potential acquisitions, upgrading its theaters and reduce its financial leverage. Hence, allowing it to reduce its debt. CEO and President Adam Aron said raising millions of dollars is a positive result for the company’s shareholders.

AMC’s business hit by the pandemic, turned to a meme stock

The company’s business was hit by the Coronavirus pandemic as theaters in the United States and other parts of the world shut down for most of last year. AMC’s stock became a meme stock, with traders on Reddit pushing its price up by 1000% since the start of the year.

Despite the positives, AMC Entertainment still has a lot to deal with. The company has roughly $5 billion in debt and had to postpone $450 million in lease repayments due to the decline in revenue over the past year.

According to the AMC’s securities filing, its market cap on Friday, May 28, was $11.8 billion. The company said its valuation doesn’t accurately reflect AMC’s financial performance or prospects. Rather, it reflects t trading dynamics based solely on market volatility. AMC warned that traders who buy their Class A common stock could record losses if there is a decline in market prices due to a return to earlier valuations.

Per its statement, AMC believes that its stock price could dip as the Reddit traders pushing it higher might not do so for the long run. However, the CEO said that with the additional liquidity, increase in people vaccinated, and the imminent release of blockbuster new movie titles, AMC will go on the offense again.

AMC Investors Show Steady Hands, Call Hedge Funds’ Bluff

The WallStreetBets forum on Reddit is filled with conspiracy theories and victory laps as AMC Entertainment oscillates between positive and negative ground. After touching on USD 36 yesterday, AMC shares remain below the USD 30 threshold today, but the recent pullback appears to only be emboldening retail investors. The stock is up approximately 100% this week alone even after falling as much as 5% in earlier trading today.

Steady Hands

According to the Reddit thread and Twitter, AML investors were not caught unaware by today’s selling. They have been saying since Thursday’s rally that hedge funds are strategizing to take on the little guy, seemingly planning to sell AMC shares in an attempt to shake off any weak hands and avoid an eventual short squeeze. You can’t really blame them.

According to financial analytics firm Ortex, borrowing in AMC is on the rise as short interest climbs nearly 3% to 17.87% of the free float. A Twitter account with the username @daylightScott was one of many people to call the sophisticated traders out, saying that the hedge funds are selling to stop the bleeding and that they are using it as a “scare tactic.”

Taunting Traders

Nonetheless, retail investors proved to have steady hands. One Reddit member with the username “AntsOnTheMoon” antagonized the hedge fund traders, asking, “Is that all you hedge funds got?” This investor took the dip as a buying opportunity, saying, “Drop the price lower, I want to buy more please.”

Source: Twitter

This appears to be the battle cry of many retail investors in the movie chain’s stock. Instead of backing down, they are sharing the size of their AMC bags and reminiscing about the sudden volatility in GameStop shares this year. This is not the short squeeze they are waiting for, and that is why there is not a lot of panic selling going on, to the dismay of the short sellers.

AMC trading volume is also through the roof, with over 516 million shares changing hands and more than USD 13 billion traded, surpassing even Tesla.

For a look at all of today’s economic events, check out our economic calendar.

Why AMC Entertainment Stock Rallied Again

AMC Video 28.05.21.

“Meme Stock” Rally Continues

Shares of the theater operator AMC Entertainment gained additional upside momentum and moved to new highs as the rally in “meme stocks” continued.

Beyond Meat stock gained some ground today, while GameStop shares opened higher but moved below yesterday’s close as traders decided to take some profits off the table.

It looks that there are still many short positions in AMC Entertainment, and retail traders managed to orchestate a major short squeeze. The stock traded near the $2.00 level at the beginning of this year and has recently managed to touch highs at $36.72, so such a move may continue to attract short sellers that are willing to bet that retail traders’ activity will cool down and the stock will move back to more reasonable levels.

What’s Next For AMC Entertainment Stock?

Analysts expect that AMC Entertainment will report a loss of $3.29 per share in 2021 and $0.85 per share in 2022. While the reopening of the economy will surely provide support to the company’s business, AMC Entertainment is nowhere near profitability in the near term.

There is no fundamental reason for the meteoric rise of the company’s stock, but fundamentals will not matter as long as AMC Entertainment stays popular on WallStreetBets and other social media forums.

I’d note that there is a big difference with the recent rally in GameStop shares as AMC Entertainment stock is moving higher on solid trading volume which resembles the volume that was seen back when the stock enjoyed strong rally in late January. In GameStop case, the trading volume is well below the levels that were seen in January – March of this year.

The high trading volume indicates that there is a lot of speculative interest in the stock, and AMC Entertainment shares will remain highly volatile in the upcoming trading sessions. Traders should be prepared for very fast moves and keep in mind that the company’s current valuation is completely detached from fundamentals.

For a look at all of today’s economic events, check out our economic calendar.

Wall Street Bets: Redditors Scoop Up More AMC as Buy List Grows

Retail investors led by Reddit forum WallStreetBets continue to drive up the price of movie chain AMC Entertainment, with the stock tacking on another 19% today. Investors are so committed to the company that they are talking about going back to the movies and splurging for popcorn when AMC shares hit USD 30. They just might get their wish.

Slot Machine Gains

Investors are comparing AMC to “sitting at a slot machine in Vegas,” and by the looks of it they are not too far off. They are continuing to buy even as the price continues to rise while setting their sights on lambos and holding on for dear life. It is a perfect storm of sorts where hedge funds are buying AMC shares to cover their short positions and institutional investors are reporting jumping on the bandwagon to ride the wave.

Meanwhile, short seller losses are mounting, reaching USD 1.8 billion in recent days across GameStop, AMC and Virgin Galactic, according to CNBC. So far this year, USD 6.7 billion has been wiped away from short-sellers in GameStop.

Not the Only Short Game in Town

While AMC and GameStop are two of the most popular stocks on the radar of WallStreetBets, they are not the only short game in town. Another post on the WallStreetBets forum is shining the spotlight on UWM Holdings, the parent company of United Wholesale Mortgage. The stock is up nearly 4% today and according to the Redditors there are some catalysts floating around.

Short interest in UWMC is said to be 22%, which incidentally is higher than that of AMC and Gamestop, at 21% and 17%, respectively. In addition, the company announced in its Q1 earnings report that it is repurchasing as much as USD 300 million in shares in the next two years, starting this month. Today the stock was in the pipeline to be added to the MSCI Global Small Cap Index. With a market cap of USD 14 billion, Wall Street Bets suggested that it could make its way to the index’s top 10 rankings.

Meanwhile, the meme stocks are also on the radar of Bank of America analysts, who believe the Reddit trend could be here to stay thanks to the rise of zero-commission trading platforms, more idle time and higher balances in savings accounts.

For a look at all of today’s economic events, check out our economic calendar.