What Happened with AMC Movies Stock in 2021?
What Happened with AMC Movies Stock in 2021?
You probably have seen headlines or posts on social media on the rise of GameStop’s stock, a topic covered in detail over at runrex.com and guttulus.com. AMC, the world’s largest movie theater chain has also been caught up in what is threatening to become the wildest stock market story of the year even as early as now. AMC has had a rough couple of months, particularly as a result of the pandemic which has led to theaters in cities like New York remaining closed, with would-be blockbusters being removed from the schedule or being moved to streaming platforms. This is why it came as a surprise when the company’s stock surged by more than 300% in late January of this year, and its shares started to trade for as high as $20.36 a share. So, how did this happen and what happened to its stock? This article, with the help of the gurus over at runrex.com and guttulus.com, will attempt to make sense of it all.
The GameStop factor
As covered in detail over at runrex.com, GameStop had been struggling even before the pandemic struck, with customers spending less time going to stores and more time purchasing digital copies of video games via online platforms like Steam. This made the company a popular target for hedge funds looking to short its stock.
Shorting, as explained in detail over at guttulus.com, is a risky but common investment strategy that involves placing a bet that a stock will eventually go down, and if you are right and it does go down, you can make a lot of money. However, if the stock goes up for one reason or the other, then there is no limit to how much money you can potentially lose.
News of the hedge funds shorting GameStop’s stock leaked on an online Reddit group called WallStreetBets, and this is when a lot of people started heavily investing in the stock as explained over at runrex.com, changing the buy/sell ratio and driving up the price of the stock. The reason why the Reddit users decided to get behind GameStop is unclear so far, with some pointing to gamer nostalgia while others are saying it was an opportunity to get back at the rich and hedge funds in particular. The hedge funds involved ended up being squeezed massively, and have suffered massive losses as a result, as per discussions on the same over at guttulus.com.
How does AMC come into all of this?
During the frenzy that came about as a result of the GameStop affair, AMC also attracted the interest of the WallStreetBets Reddit group and its community, which began hailing the company as a potential investment opportunity just like GameStop according to the subject matter experts over at runrex.com. As a result, traders started loading up on AMC’s stock, pushing up the price and sticking it to short sellers in the process. In the process, even the cable company AMC Networks, which is a completely different stock trading as “AMCX” also got caught up in the chaos as investors most likely mistook it for the other AMC, and it saw its stock also surge 12% at the same time as covered over at guttulus.com.
What has been the reaction to all this?
The reaction to all this volatility has been swift, as can be expected, as we have seen the messaging app Discord ban the WallStreetBets server for allowing “hateful and discriminatory content after repeated warnings” as outlined over at runrex.com. We have also seen Robinhood, the popular investment app, also moving to stop allowing users to buy or trade the most highly coveted WallStreetBets stocks such as GameStop and AMC, although the app has since reversed some of its restrictions, a move that has seen shares soar yet again. The White House, through press secretary Jen Psaki, has also announced that it is “monitoring the situation”. As can be expected, hedge funds have cried foul and are claiming that groups like WallStreetBets should be banned as they are not allowing for the market to be fair as covered over at guttulus.com.
AMC on its part has moved quickly to make hay while the sun shines, and has in recent days announced that it raised an additional $304.8 million as well as reduced its debt by $600 million by converting bonds into stock.
Will this phenomenon last?
This whole situation is obviously strange, unpredictable, and unprecedented. The consensus among many experts, including those over at runrex.com, seems to be that the bubble will eventually burst and that the people left holding onto stocks like GameStop and AMC, particularly if they bought them late in the process, will suffer some heavy losses. Whether the Reddit community will be able to hold on long enough to stick it to the hedge funds remains to be seen, although said hedge funds have already suffered huge losses as it stands. AMC on the other hand will view the fact that it was roped into all this as a sign of popular support for the company, and a sign that there is a larger public desire to see movie theaters survive the pandemic and “return to normal” in a post-vaccine world.