AMC shares quadruple as retailers raid hedge fund quick targets

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

Amir Hamja | Bloomberg | Getty Images

Shares in contested cinema giant AMC Entertainment more than quadrupled at the opening bell on Wednesday, amid a spate of trading activity in some of Wall Street’s worst-shortened stocks. About ten minutes after the meeting started, the stock stalled due to volatility. As soon as it started trading again, it was stopped a second time.

AMC shares rose as much as 310% immediately after the shares opened. The stock quickly gave back some of those gains, last trading 133% higher before being stopped. During premarket trading, stocks were up as much as 360%.

GameStop has more than doubled and is up 110%.

Individual investors provide brief shortages by piling up in these names, while hedge funds, on the other hand, in short supply, cover their losses quickly. They promote their activities on the Wallstreetbets Reddit Board, which has 2.8 million members. AMC appeared to be a growing topic on the board.

Retail investor influence – most notably in GameStop – has drawn the streets under its spell for the past few days, appealing to a new class of traders who grew up amid the pandemic.

“The limelight has moved from Large Cap Tech / Retail Favorites to a largely ignored corner of severely shortened small cap stocks,” Barclays said in a statement to clients on Tuesday. “Within a month, retail has made a significant impact on the price action and sentiment in these heavily truncated names, cementing investor dominance of retail options.”

AMC currently has 24% of its free float tied up in short-term interest. According to FactSet, GameStop’s short stake is 138%.

AMC rose 26% on Monday and 12% on Tuesday and is up more than 370% this week. On Monday the company announced that it had received enough funding to stay open and operational through 2021.

“This means that any talk of an impending bankruptcy for AMC is completely off the table,” said CEO Adam Aron.

During the month, AMC stocks are up more than 650%. Of course, given the stock’s downtrend over the past few years, a lower gain is now responsible for a much larger percentage move.

The passion spread to a few other heavily shorted names in early trading. Bed Bath & Beyond jumped more than 35%. According to data from S3 Partners, the retailer is the second most-trimmed stock on the market. 64% of its float is sold short. Meanwhile, Eastman Kodak, another speculative name, was up 16%. The short interest in this stock is around 20%.

Amid the surge in AMC Entertainment’s shares, AMC Networks’ shares were also on the move, up 15%. According to FactSet, AMC Networks’ short interest is currently 60%.

Short interest is the number of stocks that are being sold short relative to a company’s total available stock of stocks.

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