AMC stock skyrockets after being targeted by Reddit as the next GameStop
Stonks only go up – especially if they're getting flash-mobbed by a certain investment subreddit.
Shares of AMC Entertainment Holdings went from roughly $4 to $16 in just two days after getting pulled into the wild Wall Street drama sparked by the Reddit clan of WallStreetBets, which previously sent retailer GameStop into the price stratosphere.
If none of what you're reading in this story so far makes any sense, that's wholly understandable.
WSB is a semi-outlaw investment forum ("like 4chan found a Bloomberg Terminal" as its tagline reads) that often trades high-risk leveraged options using apps such as Robinhood that have helped game-ify investing. Members frequently post screenshots of their massive financial gains, or devastating losses, with equal braggadocio. Tesla has been a particular favorite stock (or "stonk" in the forum's slang) of the group, and the market value of the automaker has skyrocketed over the last year to what many consider to be a wholly irrational price (by one estimate, it would take 1,600 years for Tesla to earn enough money to justify its recent price action).
The group previously targeted GameStop with an eye towards making gains while also sinking hedge fund Melvin Capital Management, which was betting against (a.k.a. shorting) the stock. Tesla founder Elon Musk (a.k.a. "Papa Elon" in the group's slang) egged on the group Tuesday, tweeting "Gamestonk!!" and a link to WSB.
One member of the WSB community posted a screenshot on Tuesday allegedly turning $50,000 into an incredible $22 million off the GameStop spike due to a 41,000 percent gain.
Which leads us back to AMC, which has been beaten down during the pandemic due to many theaters being forced to close. Earlier this week, some WSB posters began speculating "can we do the same for $AMC as we did for $GME?" and touted the theater as the next target. As noted by Deadline, overall domestic box office revenue has fallen more than 80 percent due to the pandemic, yet now AMC is trading at its 2018 valuation again.
Unlike the GameStop surge, however, the AMC situation is a bit hazier and its surge less specific to WSB, with some members claiming it's merely a decoy or distraction from what they believe should continue to be the primary target – continuing to pump GameStop.
And all of this "caddys vs. the country club members" investment drama is playing out against the backdrop of a stock market that some believe has entirely become a massive bubble driven by everyday retail investors vs. established traders, and the GameStop event, and now AMC pump, is merely an extreme outlier example of the growing power of the Robinhood crowd.
So by the time you read this, AMC's stock price could be worth more than Disney or, more likely, right back down into the mid-single digits again. Yolo, etc.