AMC Entertainment (AMC) - Get AMC Entertainment Holdings Inc. Class A Report shares are flying Wednesday as massive short squeezes continue for select stocks with poor fundamentals.
The country’s biggest movie theater chain has been decimated by the coronavirus pandemic, which closed theaters for months and kept viewers at home.
In the third quarter, the company’s revenue plunged 91% to $119.5 million from $1.32 billion a year earlier. That kind of news isn’t positive for a company’s stock.
But AMC recently traded at $17.20, up nearly 250%. Before that move, the stock jumped 66% in the five trading days through Wednesday.
The Twitter feed #SaveAMC is massively trending.
The short-squeeze parade began Friday, when Andrew Left, managing partner of short seller Citron, said it was abandoning Gamestop (GME) - Get GameStop Corporation Report because of harassment from bulls.
Other stocks that have seen big-time short squeezes include Bed Bath & Beyond (BBBY) - Get Bed Bath & Beyond Inc. Report, BlackBerry (BB) - Get BlackBerry Limited Report and Koss (KOSS) - Get Koss Corporation Report.
So what’s responsible for the market mania? It’s largely happening among retail investors. With the surge of stocks overall and all kinds of speculative instruments in it -- such as special purpose acquisition companies -- they want to get in on the party.
Fueled by commentary on the likes of Robinhood Financial’s brokerage platform and Reddit’s blogging site, individuals are going nuts on the latest stock recommendations.
So how does all this end up? Likely not very pretty. Historically, bubbles burst. And how long will this last? No one knows.