AMC (AMC.US) again became a leading meme stock among retail traders during today's session, extending gains into a third week. On trading-focused social media site Stocktwits, message volume related to AMC - which measures interest in the stock - rose by more than 3.0% on Monday. Today's price increases are fueled by rumors about the potential to squeeze Wall Street short-sellers. According to Reuters some market participants believe that Wall Street institutional investors are ramping up complex options trades that let them bet the shares will fall while keeping a lid on potential losses if they instead gain.
Investors returned to AMC's stock at the end of May after its largest shareholder, the private Chinese conglomerate Dalian Wanda Group, had sold almost its entire stake in the cinema chain. Retail investors welcomed the move and purchased more shares. Last week, the hedge fund Mudrick Capital sold millions of AMC shares shortly after it announced their purchase, saying the stock was overvalued. However, this did not hold back retail investors who pushed stock prices to new local high the next day. The stock pared gains for the week Thursday and Friday after the company announced a new share sale. However, it seems that the AMC board may also be of the opinion that shares are overvalued. According to recent fillings, six AMC executives made more than $8 million in total after selling 150,000 shares. On the other hand, we know from history that in the case of "meme stocks" fundamental factors were of little importance, so it cannot be ruled out that the upward rally will continue. However, if the institutional investors will manage to regain control, then the declines can be very sharp as well.
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Shares of AMC (AMC.US), which is about 80% owned by individual investors, have risen more than 2,300% so far this year. Only today AMC stock jumped 19% however buyers failed to uphold momentum and price bounced off the 23.6 Fibonacci retracement of the last upward wave. Source: xStation5
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