Just when you thought the market was done with meme stock rallies and short squeezes, they’ve turned up again like a bad penny…
No matter your opinion of the trend, they’re still here. And they’re still making headlines.
Stocks like GameStop Corp. (NYSE: GME), AMC Entertainment Holdings Inc. (NYSE: AMC) and Bed Bath & Beyond Inc. (nasdaq: BBBY) have jumped back in the spotlight as degenerate traders (and I mean that in a good way) shifted their focus from crypto and back to the latest round of meme stock short squeezes.
Retail investors are once again pouring into these companies’ stocks and options with reckless abandon.
The thesis for the buying hinges on two ideas:Punishing overly greedy short sellers and getting exposure to the reopening of the economy.
And while there’s a case that retailers like GameStop and Bed Bath & Beyond can sustain positive momentum as we return to pre-pandemic life, indoor entertainment venues like movie theaters face very different challenges.
On Tuesday, AMC looked to capitalize on its surging popularity, announcing the sale of 8.5 million shares to Mudrick Capital Management at $27.12 per share.
If that name sounds familiar, it’s the same investment firm backing the baseball card NFT SPAC.
Mudrick followed Tuesday’s buy of AMC by unceremoniously selling all 8.5 million shares the same day amid the meme stock’s massive rally.
On Wednesday, trading of the internet’s most popular theater chain halted several times as shares hit a record high of $72.62 — a 93.5% gain from the open— shortly after 1:00 p.m. EDT.
Before the latest meme stock rally, AMC’s previous all-time high of $36.13 was set in March of 2015.
That’s an undeniably amazing move, but it’s nowhere close to a reflection of the company’s true value… And they know it. So how high will AMC stock go?
In the press release for the share buy, AMC CEO Adam Aron warned, “Our market capitalization… currently reflects valuations that diverge significantly from those seen prior to recent volatility and that are significantly higher than our market capitalization immediately prior to the COVID-19 pandemic… purchasers of our Class A common stock could incur substantial losses if there are declines in market prices driven by a return to earlier valuations.”
AMC also filed to sell 11 million more shares Thursday morning, and the stock immediately tanked…
Movie theaters are still in a lot of trouble.
Only half of all adults in the U.S. are fully vaccinated, and household budgets are tighter than they were before the pandemic.
For most, the idea of shelling out $25 per person to sit in a room with strangers for two hours isn’t a great draw. That only gets worse when they can stream new releases or binge hours of old movies on their streaming platform of choice…
How high will AMC stock go when this is all said and done is anyone’s guess.
Revenues will start to tick up over the next year, but those numbers are a long, long way off from justifying its current share price— the CEO even said as much.
At this point, there’s no way to tell when the music will stop on this meme stock rally. When it does, there will be a lot of new retail investors left holding the bag.
Click here to check out my appearance over at Cheddar News and let’s talk about how high AMC stock will go before things get more out of hand.
P.S. The last time this stock had news this big I was able to hit a 2,289% return…
That’s why I’m hosting an emergency live event tomorrow.
I want traders on the ground floor of what could be the biggest news this sector has ever seen!
Because of this one FDA Decision — worth $5 BILLION — could supercharge not just this stock…
But a small handful of stocks by the end of this month.