The dynamics that apparently contributed to a tightening in the shares of the video game retailer GameStop Corp. it also appears to be affecting the shares of a number of other heavily sold companies.
AMC Entertainment Holdings Inc. AMC,
BlackBerry Ltd. BB,
and retailer Express Inc. EXPR,
everyone experienced sudden movements with no apparent news to act as a pilot while facing a lot of bets against them. The same dynamic exists for GameStop GME,
stocks, which have risen more than 300% in the past two weeks amid investor support on Reddit’s WallStreetBets message board.
In the case of AMC, the largest cinema operator in the world, this meant gains of more than 120% in the accumulated result for the year, even with the company leading dilutive capital increases and its core business remains very threatened by the coronavirus pandemic. The crisis left most AMC cinemas closed for months in 2020, prevented major studios from launching new box office hits, and forced cinemas that were open to operate with limited capacity.
On Monday, AMC announced that it had raised $ 917 million in stocks and debt to help it through a coronavirus-impacted winter; stocks jumped 25.9% on Monday.
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“Today, the sun is shining at AMC,” Chief Executive Adam Aron said in a statement. “After securing over $ 1 billion in cash between April and November 2020 through capital increases and debt, along with a modest amount of asset sales, we are proud to announce today that in the past six weeks, AMC raised an additional capital of $ 917 million infusion to strengthen and solidify our liquidity and financial position. This means that any talk of an impending AMC bankruptcy is completely out of the question. ”
See too: Why cinema will survive the coronavirus pandemic
Mike O’Rourke, chief market strategist at Jones Trading, said someone could argue that Reddit’s WallStreetBets community saved AMC from bankruptcy caused by a pandemic. The company conducted another offer on the market for 50 million shares on Monday, he said.
See too: How you can lose everything by selling short shares, whether you’re betting against GameStop or Tesla
“The company’s stock count will be 337 million when the sale is completed, which was 58 million in October,” O’Rourke wrote in comments. “The company’s market capitalization is almost double what it was before the coronavirus.”
Like the other names caught in this speculative frenzy, AMC had a high level of interest sold as a percentage of the float, which stood at 23% on Friday. Monday’s stock sales cut short interest to 11.5% of the float, O’Rourke said.
Read: Is GameStop’s wild ride due to market manipulation by social media users – or are they exercising freedom of speech?
“The administration deserves credit for opportunistically taking advantage of the environment to gather the necessary resources to avoid bankruptcy,” he wrote.
AMC did not respond to requests for comment by email and telephone. The Securities and Exchange Commission declined to comment. Gamestop did not respond to a request for comment.
‘Investor rush’ keeps bears away
Express retailer’s shares were among those caught in the apparent short squeeze, according to Wedbush analyst Jen Redding, as shares more than tripled (up to 255%) in two days in record volume, despite no news released by the company .
Shares soared 132% on Monday in volume of 358.6 million shares on Monday, both one-day records, breaking previous records set on Friday with a 53% gain in volume of 77, 3 million shares. In comparison, the average volume for the entire day in the last 30 days was 18.9 million shares.
The company confirmed to MarketWatch that its last public announcement was made on January 14, when shares soared 24% in the volume of about 51 million shares after Express revealed a $ 140 million additional financing deal with Sycamore Partners, as well as Wells Fargo and Bank of America. This financing was definitely good news for a retailer struggling to remain solvent. But the stock fell 9.4% in the following three days, so it is unlikely that the Friday to Monday high was the result of that news.
“We are focused on our strategy for transforming the EXPRESSway Forward and things that are under our control,” said Dan Aldridge III, vice president of investor relations, in a statement sent by email.
In addition to the “broader squeeze game” of the best-selling stocks, Wedbush’s Redding said the stock benefited from an “investor stampede” after optimistic comments from Twitter “personality” Will Meade.
Meade’s Twitter profile says he is a former portfolio manager for a $ 1 billion hedge fund at Goldman Sachs, with more than 127,000 followers (he has not been verified).
On January 22, just before the two-day Express trip, Meade tweeted that Express shares met the criteria for being the next GameStop, since it had a low stock price, had a retail brand that could turn around and had a high interest in uncovered levels, at about 13% of the public float.
Redding reiterated his neutral rating on the Express and his $ 1.50 stock price target.
“We are more cautious about the price and valuation of the shares now, as the Express stock burst seems to discount the company’s cash bleeding,” wrote Redding in a note to customers.
The shares fell 28% in Tuesday afternoon trading, enough to make them the biggest drop listed on the NYSE. The volume reached 44.2 million shares, keeping pace with Friday’s total.
Increase in BlackBerry shares leads RBC analyst to consider it a sale
BlackBerry was another harmed action in the recent squeeze play. With stocks rising 0.6% in Tuesday afternoon trading, shares in the Canadian-based cybersecurity software company have already reached 144% amid an eight-day winning streak.
On Monday, BlackBerry commented on the recent trading of its shares, at the request of the Canadian Investment Industry Regulatory Organization (IIROC): “The company is not aware of any relevant and undisclosed corporate development and has had no significant changes in their business or matters that have not been publicly disclosed that would be responsible for the recent increase in the market price or trading volume of their common shares ”.
From Barron’s: donkey stock is rising due to a small market squeeze
The stock surge was fueled by reports in The Globe and Mail that she had sold 90 patents to China’s technology giant Huawei, and after the company allegedly resolved a patent infringement lawsuit against Facebook Inc. FB,
RBC Capital Markets analyst Paul Treiber did not believe it, saying that while the news from Huawei and Facebook was positive, the magnitude of the potential gains was probably much less than what the bullish stock added to the market capitalization of the BlackBerry.
Treiber reduced its rating to underperforming the industry’s performance.
Other actions apparently exploded in the craze:
• Bed Bath & Beyond Inc. BBBY,
saw its shares rise by 50% on Monday, bringing its cumulative earnings to 96%. The gains came even after the retailer’s third-quarter earnings released earlier this month fell far short of expectations.
• Headphone manufacturer Koss Inc. KOSS,
rose 55% on Tuesday, bringing its cumulative earnings to 173%. Koss hasn’t published a press release since October 29, when it published its first quarter earnings