The AMC stock price has surged 2500% year-to-date with the mad rally driven by WallStreetBets retail investors over the last few weeks. AMC Entertainment is hinging its hopes on the reopening of theatres with the government lifting up the restrictions.
On Monday, June 7, AMC Entertainment Holdings Inc (NYSE: AMC) continued its rally for another week shooting 20% during market hours. At Monday’s closing, the AMC Stock price was trading 14.80% up at $55.0. The stock has witnessed some speculative trading activity with its price surging 80% last week. Currently, AMC has been on the radar of the Reddit-based infamous WallStreetBets forum which was behind the GameStop Corporation (NYSE: GME) rally. This group of retail traders has encouraged each other to pile the shares and its call options.
AMC Influenced by WallStreetBets
After advancing over 160% during the last month of May 2021, the AMC stock price has surged over 110% in June so far. With this, the AMC stock has also extended its year-to-date returns to over 2500%. Following all the GameStop mania caused by WallStreetBets traders, the AMC stock surged to a high of $62.55 last week.
Seeing this wild price volatility and trading behavior, brokers have started taking the necessary steps. On Sunday, brokerage firm TD Ameritrade said that it has increased the margin requirements on AMC and GME to 100%. Thus, investors will have to purchase all of the securities with cash.
Calls for NakedShorting of AMC appeared across social media on Monday. Naked shorting is an illegal practice wherein a stock’s short interest might be higher than the tradable shares in the market. The SEC said that it is keeping a close watch on the wild trading behavior of AMC stock. The SEC will determine in case there are “any disruptions of the market, manipulative trading, or other misconduct.”
AMC Entertainment Optimistic with the Opening of Theatres
The COVID-19 pandemic-led lockdowns have severely hampered businesses like AMC Entertainment. However, with the lifting of lockdowns, people are finally returning to cinemas. The ticket sales have also shot news high of the pandemic era as domestic box offices manage to lure movie enthusiasts.
This is particularly good news for AMC Entertainment which has initiated bold moves recently. AMC Entertainment is betting big on the fact that the public will continue to turn to theatres to watch movies on the big screen.
From its stock sale, the world’s largest movie theatre company has raised a massive $2 billion in cash since the beginning of 2021. Using these funds, AMC’s CEO Adam Aron said that the company is looking ahead to fresh acquisitions including the purchase of ArcLight and Pacific theatres.
Besides, the company also looks to paying part of its $5 billion debt. This move aims at reducing the interest costs while paying millions in unpaid rent. Tom Nunan, a lecturer at the UCLA School of Theater, told CNBC:
“I think AMC is doing the right thing. The reason I say that is there’s no question in my mind that Americans want to maintain the option of going out to the movies. So, having the moviegoing experience run by experienced movie theaters like AMC is a good thing. And I think AMC has made the wager … that in the immediate term, ‘Let’s run the table, let’s be by far the biggest theater owner and possibly an even larger theater tenant.’”
The revival of the theatre industry looks poised with the government lifting the restrictions on going to public places. The pent-up demand could further help to pick up sales for industry players like AMC.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
