AMC shares gain 100% in a day   


June 3 (Lagos) - shares of American movie chain group, AMC Entertainment gained more than 110% in intra-day trading yesterday in New York before closing the day with a gain of 95% and a valuation of USD 30 billion, which is more than 50% of companies listed on the S&P500 index. 


The cinemas themselves are largely shut due to Covid-19. The surge in price is a result of renewed interest from an investor group of REDDIT website known as WALL STREET BETS or simply WSB. These are retail investors sharing ideas on the group and buying particular shares in droves and driving the price higher and higher. WSB was responsible for similar price action in shares of GAMESTOP earlier this year, another company which was shut down because of Covid-19 pandemic. 


WSB is known to go after short sellers and they target companies which have a high short interest. Short selling is when you bet that a price of a stock will fall and you borrow shares to sell at a higher price to buy back lower in order to profit from the price difference. However if the price goes up, you have to buy those same shares back at a higher price leading to a loss. Large hedge funds had short positions in these stocks because they expected the price to collapse given the pandemic and closure of these businesses. Now these hedge funds have lost billions of Dollars thanks to WSB.


These are real retail investors showing hedge funds who is in control. They are able to do so by sharing ideas on an investment group on REDDIT website and collectively buying shares at any price that is available. Thousands of people doing this together and what you have is a nightmare for wall street hedge funds who are losing billions of Dollars as a result. 


AMC shares were trading at $2.00 at the end of 2020 and are not up 3000% in less than 6 months. 


If we compare the valuation to the Nigerian settings, this cinema chain is now worth more than DANGCEM , MTNN , AIRTELAFRI and NESTLE combined and the cinemas are currently shut. Although they are offering free pop corn and movie tickets to retail investors when they do open. 


Wall street analysts are already warning that this is turning into gambling and that the price of AMC will crash hard very soon. At the end the hedge funds always win but for now they are having sleepless nights or who really knows, maybe some of them are part of WSB


Price fall is likely because anything that goes up so quickly will eventually come down crashing but for now the party continues. 


The champagne is on the ice. 






reporting for easykobo.com on Thursday, June 3 2021 from Lagos, Nigeria


DISCLAIMER - This article is an opinion article, writer is long shares of AMC at the moment. Do not buy shares without consulting a financial advisor as you can end of losing your investment. 
Copyright @ 2010-2019 Easykobo.com by Naija infotech & solar energy ltd. All rights reserved