#When will amc squeeze movie#

COVID-19 hits the US hard, and AMC is forced to close all theatres.

Final thoughtsĪfter a more than 2,500% year-to-date gain, there is still no evidence of a large-scale unwinding of short positions in AMC.ĪMC, however, is the clear winner here because management has found a lucrative way to monetize the Reddit army and the trading frenzy by raising capital at exorbitant prices.Let’s flash forward to March 2020. This game of musical chairs will likely end very badly and the risks at this valuation are extreme. It will get dangerous when everyone wants to exit the AMC pump at the same time. Longer term, AMC’s valuation should come back to reality again and trade according to the firm's fundamentals. Short term, shares of AMC can go either up or down, and volatility spikes can inflict large losses on shorts and longs. But there is also no guarantee that the Reddit army will win. While there is evidence that hedge funds have started to ramp up their bearish bets again on AMC in Q2’21, there is no guarantee that hedge funds will win this fight. With estimated revenues of $4.8b next year (and no profits in sight until at least FY 2024), AMC now trades at a P-S ratio of 6 which is absolutely extreme. But shareholders have now been heavily diluted, too, which diminishes their claims on future profits.ĪMC's valuation has only become more disconnected from reality this week.

#When will amc squeeze movie#

The survival of AMC Entertainment is not in question after the movie theater chain sold more equity this month. (Source: Bloomberg) AMC’s valuation is from another planet. There is no evidence so far that hedge funds are closing their short positions on meme stocks, including AMC, and AMC's short interest ratio will likely see an increase in June, too. Short-sellers seem to be increasing their bearish bets on AMC again amid another surge in AMC's valuation this month. Clover Health ( CLOV) and Clean Energy Fuels ( CLNE) are two other examples of meme stocks that have attracted higher short volumes with rising valuations. Extreme overvaluations attract short sellers, they don’t repel them. a fact that is unfortunately under-reported.ĪMC’s short interest has been rising since February and the short interest ratio is now back to where it was at the beginning of the year, above twenty percent. What this means is that despite sitting on billions of mark-to-market losses, the short side of the AMC trade is not selling. This shows that there is no evidence of a real short squeeze which seems to be ignored on Reddit. Also worth noting: Despite large-scale buying of AMC in May, AMC's short interest at the end of the month went up 8.2%.Įvery time AMC's short interest ratio dropped in 2021, it immediately recovered. AMC now has 502m shares outstanding and a total market value of $28b.Ībout 100m shares are sold short, which calculates to a short ratio of about 23%. In total, AMC raised a massive $1.25b through equity sales in Q2’21. this time the movie theater chain sold $11.55m shares under its at-the-market equity program for total proceeds of $587.4m.

Sure enough, just a few days later, AMC announced another equity raise. The successful equity sale taught a very valuable lesson to AMC, however, because management found a way to monetize the Reddit-driven trading frenzy by selling more equity at a ludicrous valuation.

Mudrick Capital Management quickly flipped its AMC stake to the Reddit army and booked a 20% profit on the trade. AMC is raising a lot of moneyĪMC raised $230.5m at the beginning of the month by selling 8.5m shares to hedge fund Mudrick Capital Management at an implied price of $27.12. This may be a good time to sell AMC and walk away before this dangerous game of musical chairs stops. After a 2,500% increase in AMC's price, there is no evidence of a short squeeze. While AMC Entertainment ( NYSE: AMC) is still an “in-play” meme stock and heavily supported on Reddit's WallStreetBets, short-sellers appear to dig in as well. Massimo Giachetti/iStock Editorial via Getty Images