Street performers in Minnie Mouse costumes pass in front of an AMC cinema at night in New York’s Times Square neighborhood on October 15, 2020.
Amir Hamja | Bloomberg | Getty Images
The shares of movie giant AMC Entertainment more than tripled during pre-market trading on Wednesday, amid a flurry of trading in some of the best-selling stocks on Wall Street.
AMC’s shares jumped 230% before Wednesday’s opening bell, while GameStop rose 67%.
Individual investors are creating short-term restrictions by accumulating these names, while hedge funds that are sold on the other side rush to cover their losses. They are promoting their activity on the Reddit wallstreetbets, which has 2.8 million members. AMC appeared to be a topic of growing interest on the board.
The influence of retail investors – most apparent on GameStop – has captivated Street in recent days and speaks to a new class of traders who grew up in the midst of the pandemic.
“The spotlight has shifted from Large Cap Tech / ‘Retail Favorites’ to a largely overlooked corner of lower capitalization shares heavily shorted,” Barclays said on Tuesday in a note to customers. “In a period of one month, retail trade significantly impacted the price and sentiment of these heavily sold names, cementing the dominance of investors in retail options.”
AMC currently has 24% of its float tied to unsecured interest. Meanwhile, GameStop’s short sale stands at 138%, according to FactSet.
AMC jumped 26% on Monday and 12% on Tuesday, bringing its weekly gain after just two days to more than 40%. On Monday, the company announced that it had secured sufficient funding to remain open and operational until 2021.
“This means that any talk of an impending AMC bankruptcy is completely out of the question,” said CEO Adam Aron.
In the month, AMC’s shares rose more than 130%. However, given the stock’s decline in recent years, a smaller gain, of course, now accounts for a much larger percentage move.