Retail investors were net sellers of AMC Entertainment stock on Tuesday for the first time since February, even as shares climbed 9%, according to new data from Vanda Research.
The firm says the gains were instead driven by institutional investors.
“Many hedge funds are now trying to anticipate changes in retail sentiment and buy these stocks before mom and pop investors get involved,” Vanda analysts wrote.
The stock is now up more than 2,000% since the start of 2021.
AMC on Tuesday said more than 2 million people attended a movie at its theaters during Labor Day weekend, surpassing attendance for the same holiday weekend in 2019, before the coronavirus pandemic hit.
The firm noted a stark slowdown in retail purchases of AMC shares. According to Vanda’s data, day traders were buying more than $1 billion per week during peak meme-stock rallies in January and June. But since the stock’s latest rally started in August, they’ve bought less than $250 million.
AMC has been a day-trader favorite for months, attracting loads of posts on social-media sites like Reddit’s Wall Street Bets, StockTwits, and Twitter. Those retail investors have banded together on multiple occasions to squeeze the shares of heavily shorted companies higher.
Stocks have steadily advanced in 2021 as the economy rebounded from the pandemic, but the S&P 500’s solid gains pale in comparison to those of previously left-for-dead companies like GameStop (GME) and AMC Entertainment (AMC).
Those long-suffering stocks shocked the world by spiking as much as 1,700% and 2,800%, respectively, and ushered in a new era of investing in what are now known as meme stocks.
Meme stocks have no precise definition, but they’re not hard to spot. Common characteristics of these select few stocks include sudden rallies and volatile price swings on unusually high trading volume.
The action is typically driven by members of online forums like Reddit and social media users, who sometimes make and share memes to promote and build momentum around the stock’s rally. But stocks that meet the above criteria can be considered meme stocks without having a big online following.
Below is a comprehensive breakdown of Insider’s coverage of the meme stock movement and how investors can profit from it.
Top meme stocks now
Retail investors are always searching for stocks to send “to the moon.” Below are some of the hottest names that social media users are buzzing about during the week of August 23.
Trading meme stocks isn’t as simple as it sounds. It takes hours to surf through Reddit forums for the next trendy stock, and it requires a huge, carefully coordinated online movement to send individual stocks spiking.
But sending meme stocks to the moon isn’t rocket science either. Insider has interviewed investing pros who have simple strategies for spotting meme stocks, as well as the creator of a site that saves investors time by scanning Reddit forums for the next big meme stock.
Just as important as finding the next hot meme stock is avoiding common trading mistakes. An analyst who’s covered GameStop since 2002 told Insider how to spot short squeezes and avoid getting burned, and a strategist shared how to avoid landmines in a rapidly evolving investing landscape that now includes meme stocks.
GameStop is widely considered to be the first meme stock. The long-beleaguered video-game retailer suffered for years as its sales were cannibalized by e-commerce giants like Amazon and by the video-game industry’s shift to online games. Its C-suite became a revolving door for executives: Three different CEOs led the firm in 2018 alone.
GameStop’s miraculous surge began in January 2021 after Ryan Cohen, the founder of online pet-store company Chewy, joined the company’s board and inspired optimism among investors. Cohen could spearhead GameStop’s e-commerce efforts and help the company get back on track, investors believed.
But the main reason behind GameStop’s monumental move was a massive short squeeze.
Convinced the video-game seller was destined for the same fate as Blockbuster, a handful of Wall Street pros bet against the stock through shorting, a process where investors borrow shares of a company they think will decline, then sell them immediately in hopes of buying them back at a cheaper price before returning them and booking a profit.
Small-time traders flipped the script on hedge funds by driving the price of the heavily shorted shares up, forcing the bears to close their positions by buying back borrowed shares, which perpetuated the cycle. The stock then rose to the moon, and the rest is history.
If getting rich off meme stocks were easy, thousands of Redditors would be millionaires.
The harsh reality of markets is that for every buyer, there must be a seller. For every trader that nailed the bottom of a stock, someone else sold at the worst possible time – and every time an investor sells at the peak, someone must have bought ahead of the crash. Some unlucky soul bought GameStop shares at its all-time high of $483.
By definition, investing in meme stocks is incredibly risky, and poorly-timed trades can lead to massive losses. Critics have said the practice creates “false markets” and reflects how the market is broken.
Michael Burry, the hedge fund mogul who predicted the housing market crash, told Barron’s via email earlier this summer that a meme stock crash could come soon.
“I believe the retail crowd is fully invested in this theme, and Wall Street has jumped on the coattails,” Burry said. “We’re running out of new money available to jump on the bandwagon.”
It’s paid to follow what stocks Reddit’s Wall Street Bets crowd are talking about this year, as several have gone through epic rallies and seen heightened volatility.
From GameStop in January to AMC Entertainment in June, the near 11 million-member forum has driven the conversation in so-called meme stocks that have exploded higher amid overwhelming demand from retail investors. Strong demand for stocks with shaky fundamentals has led to several hedge fund blowups that were caught on the opposite side of the trade betting against the company in question.
Gabe Plotkin’s Melvin Capital Management, targeted by the Reddit army of day traders for its bearish GameStop bets, ended the first half of the year with a 46% loss, Bloomberg reported.
The New York-based hedge fund, which suffered a stunning 53% loss in January from the Reddit-trader short squeeze, gained 1% in June. But it is still struggling to recover, Bloomberg said in the Thursday report, citing sources familiar with the matter.
Melvin Capital, founded by star portfolio manager Plotkin, did manage to stage something of a comeback with a 22% gain in February. But its overall first-quarter loss stood at 49%, Insider understands.
Melvin Capital lost a chunk of its assets in the trading frenzy, ending January with $8 billion in assets, down from $12.5 billion at the start of the year. Its assets had risen to $11 billion as of June 1, the Financial Times and Bloomberg reported.
After the January hit, the fund has somewhat recovered. It is up 18% for the five months between February and June, Insider understands. It gained 5.4% in the second quarter.
The hedge fund is understood to be taking smaller-sized positions to limit its exposure to single companies. It exited its public short positions against GameStop, AMC and other stocks in the first quarter, but may have still held non-public, more traditional short positions.
Founder Gabe Plotkin has also asked a team of data scientists to comb through social media and day-trader forums for stock names of interest to retail traders, Bloomberg reported.
A spokesperson for Melvin Capital declined to comment.
It’s paid to follow what stocks Reddit’s Wall Street Bets crowd are talking about this year, as several have gone through epic rallies.
From GameStop in January to AMC Entertainment last month, the 10.6 million-member forum has driven the conversation in so-called meme stocks that have exploded higher amid overwhelming demand from retail investors. Strong demand for stocks with shaky fundamentals has led to several hedge fund blowups that were caught on the opposite side of the trade betting against the company in question.
As traders look to replicate the success of Wall Street Bets stocks, one data aggregator is compiling the most mentioned stocks on Reddit’s forum.
These are the top 10 meme stocks Reddit’s WallStreetBets forum is focused on right now, according to data compiled by SwaggyStocks. The list excludes mega-cap tech stocks and is based on mentions over the past 24 hours.
10. Cleveland Cliffs
Ticker: CLF Wall Street Bet Mentions Over Past 24 Hours: 89 Market Capitalization: $10.3 billion
9. Virgin Galactic
Ticker: SPCE Wall Street Bet Mentions Over Past 24 Hours: 124 Market Capitalization: $10.7 billion
Ticker: BB Wall Street Bet Mentions Over Past 24 Hours: 145 Market Capitalization: $7.0 billion
Ticker: PLTR Wall Street Bet Mentions Over Past 24 Hours: 192 Market Capitalization: $46.9 billion
6. Clean Energy Fuels
Ticker: CLNE Wall Street Bet Mentions Over Past 24 Hours: 196 Market Capitalization: $2.0 billion
Ticker: SOFI Wall Street Bet Mentions Over Past 24 Hours: 227 Market Capitalization: $13.9 billion
Ticker: GME Wall Street Bet Mentions Over Past 24 Hours: 275 Market Capitalization: $14.4 billion
Ticker: WISH Wall Street Bet Mentions Over Past 24 Hours: 289 Market Capitalization: $7.7 billion
2. AMC Entertainment
Ticker: AMC Wall Street Bet Mentions Over Past 24 Hours: 297 Market Capitalization: $26.1 billion
1. Clover Health
Ticker: CLOV Wall Street Bet Mentions Over Past 24 Hours: 468 Market Capitalization: $4.3 billion
AMC canceled a proposal that would have asked its shareholders to allow the movie theater chain to issue up to 25 million more shares, SEC filings show.
CEO Adam Aron tweeted on Tuesday that AMC would not proceed with the vote, and added that the movie theater operator will not make any more share increase requests in 2021.
“It’s no secret I think shareholders should authorize 25 million more AMC shares. But what YOU think is important to us. Many yes, many no,” Aron tweeted, alongside an image with the phrases “I see you, I hear you, I value you.”
The share increase was one of five proposals on the agenda during AMC’s upcoming annual meeting of stockholders.
The Board of Directors indicated they were for the share increase, and CEO Adam Aron said last month that the increase would be an important tool to strengthen the company.
Reddit users in the r/AMCstock channel cheered the movie theater chain’s decision to cancel the vote. Many speculated that AMC canceled the vote because so many shareholders had already voted against it.
“He did it! Adam Aron fu**in took the one thing that was dividing apes and squashed it! KING SILVER BACK BABY!!!!!,” one user commented, referring to Aron’s nickname among retail investors on Reddit.
Shares of AMC jumped as high as 5.9% after the Tuesday opening bell.
AMC’s annual meeting of stockholders will take place on July 29 at 2 p.m. central time. Proposals still on the agenda include re-electing certain board directors, approving the appointment of Ernst & Young as independent auditors, approving a non-binding vote on the compensation of executive officers, and voting on the ability to adjourn the stockholders meeting if necessary.
Meme stock and Reddit favorite AMC Entertainment soared on Monday, surging as much as 10% following a strong weekend at the movies.
Driven by hot weather and the opening of “Fast and Furious 9,” AMC saw more than 2 million guests visit its theaters over the weekend, representing a post-pandemic record for the company.
“Fast and Furious 9” also broke records, with the movie generating $70 million in ticket sales over the weekend. That’s the biggest opening weekend for a movie since 2019’s Star Wars: The Rise of Skywalker.
According to AMC, six of its movie theater locations represented the top 10 busiest theaters in the US. And an additional 500,000 people visited AMC’s international locations over the weekend, according to the company.
“The combination of widespread vaccination and the release once again of blockbuster movies is proving to be the magic formula for the return of moviegoing,” AMC CEO Adam Aron said.
Despite the near-record stock price and an improving outlook for movie ticket sales, some investors remain unconvinced that AMC is worth its current market valuation of nearly $30 billion. Short interest as a percentage of AMC’s entire share float still stands at just below 20%, according to data from ShortSqueeze.
Reddit is auctioning three non-fungible tokens powered by the ethereum blockchain, with the social media site taking bid from now until July 1.
The tokens are called “CryptoSnoos NFTs” and feature the famous alien mascot of the social media site. The Block was first to report.
“Take advantage of this rare opportunity to own a piece of Reddit history-snag a CryptoSnoo NFT,” the website said.
The three CryptoSnoos NFTs are named Original Block, Helium, and Snooprematic.
All were minted on June 17 and are on sale on NFT platform OpenSea.
According to Reddit, Original Block is inspired by Reddit’s characteristic Snoo caricature. Helium, meanwhile, is associated with the “contemporary art movement” and “everyday objects that are blue and sparkle.” Snooprematic is influenced by a “geometric vocabulary.”
The current highest bid for Original Block is $3,959.82, for Helium it’s $1,979.91, and for Snooprematic, it’s $1,394.07.
Once purchased, buyers will get access to a URL that will take them to a webpage dedicated to their NFTs.
NFTs are unique digital assets secured on a blockchain. Each NFT has its own signature, which can be verified in the public ledger and cannot be duplicated.
NFTs have soared in popularity in 2021. Artwork, tweets, and news columns turned into digital art have fetched millions of dollars at auction.
AMC Entertainment CEO Adam Aron gave his twin sons 500,000 shares of the movie theater chain in March, at the time worth about $6.8 million, according to a March 17 filing with the Securities and Exchange Commission, Bloomberg first reported.
But following a massive surge, those shares have seen a five-fold gain and are now valued at around $31.2 million.
As for Aron, the filing revealed that his shares and longer-term grants are now worth more than $260 million.
The meteoric rally has some analysts sounding the alarm yet again over unrealistic valuations. David Trainer, CEO of New Constructs, said AMC’s stock is trading at levels that are disconnected from fundamentals.
“There is no fundamental reason to be buying shares of AMC Entertainment,” Trainer said in a statement. “We think AMC Entertainment’s stock is worth $0 per share, given its weak earnings, dilution from recent stock offerings and mountain of debt.”
AMC shares are trading lower by 21.03% to $49.39 as of 12:13 p.m. ET Thursday.
AMC Entertainment surged Wednesday despite a share dump from hedge fund Mudrick Capital.
Shares of the world’s largest movie theater operator jumped as much as 126% to trade around $72, triggering a halt for volatility. The surge built on Tuesday’s gains, which pushed the stock 23% higher during the session to close at $32.04. AMC shares have now spiked almost 500% in just seven trading days.
The Leawood, Kansas-based company announced Tuesday it raised $230.5 million in cash after agreeing to sell 8.5 million shares to Mudrick Capital for $27.12 each, a dollar higher than the stock’s Friday closing price. Shares surged following the news as the company said it would use the funds to make acquisitions, improve consumer appeal, and deleveraging.
Just hours after the announcement, Mudrick Capital sold its entire stake at a profit, Bloomberg reported. Despite the share dump, the meme stock continued its rally early Wednesday as retail traders remained bullish. The stock remained one of the top talked-about companies on Reddit threads like Wall Street Bets, HypeEquity data showed.
AMC has led a broader rally in meme stocks, like GameStop and BlackBerry, so far this week amid renewed interest in the retail-trader favorites. BlackBerry, for its part, closed 15% higher at $11.56 Tuesday and continued rallying in early morning trading, as GameStop closed 12% higher at $27.02 Tuesday and upticked just slightly Wednesday.
Last week, shares of the movie theater operator rallied for days after private Chinese conglomerate Dalian Wanda Group announced it sold nearly all of its remaining stake in the company. Retail traders cheered the newly available shares, more than doubling the stock price through the course of the week.
Retail traders have invested in heavily shorted stocks like AMC and GameStop, in an effort to squeeze short sellers, who have lost billions on their bets. But shorts haven’t given up as short interest in the stocks is 21%, according to MarketBeat data.
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