Movie theater company AMC (AMC) - Get AMC Entertainment Holdings, Inc. Class A Report has been making a strong (even if incipient) case for the recovery of its business, severely impacted by the pandemic in 2020. The company’s recent quarterly results should have been strong enough to instill confidence in AMC shareholders, even though the stock has failed to react positively after earnings.
In any case, AMC stock remains one of the most popular among retail investors. A look around online forums suggests that apes' confidence remains unshakable that AMC’s massive short squeeze could happen soon. Today, Wall Street Memes lists three reasons to support the idea.
1# Apes strong together
The ape community is made up of more than 4 million shareholders, as announced by the company in July, many of them retail investors. AMC stock, which has climbed more than 600% since January, is an example of how its shareholders can help to keep share price at elevated levels, backed by diamond hands apes HODLing and buying the dips.
On Reddit, forums related to AMC have more than 500,000 participants in total, making it the ticker with the highest number of followers across the platform. These followers seem united around one main cause: to fight the toxicity in the US stock market, where institutional investors allegedly engage in naked shorting and dark pool activities to profit from the misfortune of a company.
Lastly, AMC seems to like and value the ape community. CEO Adam Aron has taken into consideration opinions and ideas of its shareholders and put them to work. One example is the decision to cancel the issuance of 25 million new shares, made to align capital policy with the votes of AMC's shareholders.
2# AMC’s short interest still high
According to data provided by Yahoo Finance, as of July 29, AMC had 16% of the float shorted, which is considered high. At these levels of short selling, the stock is constantly at the risk of undergoing a squeeze, if or when the stars align.
Even worse for the bears, most apes believe that this number may be much higher than the “official” reported, due to naked shorting practices and lack of transparency in the dark pool. Shorts have already lost billions of dollars since “the ape revolt” of earlier this year, and quite a bit of short positions have yet to be covered.
3# SEC is looking closely at dark pools
Apes’ claims of lack of transparency regarding dark pool activity seemed to work, as the complaints reached SEC Chair Gary Gensler. According to him, the agency is looking closely at dark pool activity to make sure investors are guarded against fraud and manipulation.
Any action taken by the SEC in the direction of regulatory scrutiny could be a bullish catalyst. If this is the case, AMC’s short squeeze could occur even sooner than some expect.
Recently, Wall Street Memes asked AMC apes and stock enthusiasts whether potential regulation around dark pools could have a substantial positive impact on AMC stock performance. Check out the results below.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)