Tuesday was a pretty weird day for the markets. Despite seemingly being no major news announcement nor catalyst, meme stocks quickly started skyrocketing in price. Blackberry (NYSE: BB), Bed Bath & Beyond (NASDAQ: BBBY), and other stocks traded by Redditors on WallStreetBets skyrocketed in value. However, the biggest winner of them all was AMC Entertainment (NYSE: AMC).
It seems management is equally as aware of its newfound meme stock status, with the company announcing a new investor relations initiative to support – if not simply acknowledge – all these new retail investors. Nicknamed “AMC Investor Connect,” management claims that the new initiative would help communicate with these new ordinary investors that bought up the stock.
As of right now, there are over 3 million shareholders, with retail investors owning 80% of that amount. It’s a stark contrast to over a year ago, where AMC was primarily being shorted by institutional players like hedge funds. Most of these players have lost a ton of money and have exited their existing short positions by now.
“Many of our investors have demonstrated support and confidence in AMC. We intend to communicate often with these investors, and from time to time provide them with special benefits at our theatres. We start with a free large popcorn on us, when they attend their first movie at an AMC theatre this summer,” said AMC CEO and President Adam Aron. “With AMC Investor Connect, that effort in relationship building will continue apace even if our shareholders now number in the millions.”
Do most of these new investors care about AMC’s long-term prospects? Probably not. If anything, most are more concerned about making a quick buck and riding AMC “to the moon.” However, the fact AMC’s management is acknowledging and essentially encouraging these new investors helped send its stock price surging even more.
AMC was first up around 30% on Tuesday but quickly skyrocketed to more than a 95% gain by the end of the trading day. Shares are still going up even in Wednesday’s pre-market trading, gaining more than 16.7% on top of its previous gains.
As you’d expect, most serious analysts think AMC is just a ticking time bomb. From a fundamental perspective, nothing has changed with the company. Despite raising an extra $400 million recently, the movie theatre chain is still losing money like crazy, and even a strong summer likely won’t change that.
Of all the Wall Street analysts covering AMC, none are bullish. However, a few think the stock is a “hold,” trying to ride out this extra speculative momentum before it fades away for good. However, there’s no point guessing when prices will come crashing back down to earth. Most that have tried have already lost a ton of money in the resulting short squeeze.
AMC Company Profile
AMC Entertainment Holdings Inc is involved in the theatrical exhibition business. It owns, operates or has interests in theatres located in the United States and Europe. It provides best-in-class amenities such as plush, power recliners, MacGuffins full bars, AMC Dine-In Theatres, premium presentation. The group operates in U.S. markets and International markets. – Warrior Trading News
