AMC Up 200%? Thanks WallStreetBets.

January 27, 2021

Damyan

Written by Damyan I write this stuff. Enjoy You should follow them on Twitter

We are witnessing some biblical movements in the stock market in recent days. Of course, our favorite Yolo-investors are to blame. AMC share price is 200% up pre-market trading. This comes as a massive surprise for the company. Which was struggling during the pandemic.  AMC announced $917 million in financing on Monday. The shares jumped. But nothing like the 200% we are seeing today.

Why AMC?

In short, the shorts. Just as GameStop stock was one of the most shorted stocks, so was AMC. Hedge-Funds looking for blood quickly chose the struggling movie theater company operating during a pandemic. But the fed-up, nostalgia-driven retail investors with all the power right now are having non of it. Redditor’s are buying option calls to drive the stock up. The option sellers will need to hedge the calls. This is why a Gamma squeeze is likely to happen. A short burst in the stock price, before everything settles down.

For sure hedge-funds will try every trick in the book to drive AMC stock price down. They might even try naked shorting. Or an illegal practice of shorting stocks without borrowing the stock first. Which might work. But only for a little while. We saw that play out on Monday with GameStop stock. Expect massive volatility. Also, expect trading to be halted. Nasdaq has already warned that they will halt trading if social media chattering continues. This is for sure will spur Redditors even more.

Some are even calling for action from the SEC. Which is understandable. Stock market manipulation is a crime. Unless you’re rich and powerful. But look at it this way. These people do this because they love GameStop and AMC. Some legal experts say SEC has to intervene, others say that even though this is highly unusual no laws are being broken. Although one thing is for sure. Don’t f*ck with the internet and their beloved stocks.

Read the story on GameStop stock here.

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