AMC rips 15% higher as Reddit traders stick to their favorite meme stocks
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- AMC gained as much as 15% in early Tuesday trading as Reddit traders piled into the theater chain's shares.
- While the day-trading phenomenon died out earlier this month, Tuesday's climb suggests the crowd still holds some sway in the market.
- Reopenings and vaccination could lift AMC from its COVID-19 slump, one Reddit user said.
- Watch AMC trade live here.
AMC Entertainment surged as much as 15% in early Tuesday trading as retail investors banding together in online forums returned to the struggling theater chain.
The world's biggest movie-theater company saw its stock price skyrocket in late January as traders in Reddit groups including r/wallstreetbets piled into highly shorted stocks. Shares soared as high as $20.36 on January 27 before plunging back to earth as the day-trader phenomenon fizzled out.
Tuesday's price action suggests the crowd of casual investors is still somewhat in it. The gains placed shares at their highest in about a week. Posts on Wall Street Bets hailed AMC as a top recovery play and praised the company's recent stock sales as a key lifeline. Vaccinations and economic reopening could revive AMC from its virus-induced downturn, Reddit user u/ImFedUpWithItAll said in a post detailing his bullish thesis.
"I'm not Buffett so I'm not buying for life. I'm in this for the rally to normalcy," they added.
AMC was the most heavily traded company on the New York Stock Exchange before the market opened. Other stocks featured on Wall Street Bets fared worse. Investors looking to lift Palantir saw shares tumble in early trading. GameStop - the group's favorite stock during the January rally - rose slightly.
The theater chain was among the few companies able to convert extraordinary retail-trader demand into a stronger balance sheet. The company raised more than $300 million last month by selling shares during the Reddit-trader rally. When coupled with a $411 million credit line, the fundraising efforts took bankruptcy talks "completely off the table," CEO Adam Aron said in a statement.
To be sure, locations in key markets including California and New York remain closed as COVID-19 cases rise across the country. The halt to regular operations endangered the company earlier in the pandemic and forced warnings of extinguished cash reserves.
Daily COVID-19 case counts have since fallen, prompting investors to shift back into so-called reopening sectors including travel, leisure, and entertainment.
AMC closed at $5.59 on Friday, up roughly 158% year-to-date. The company has three "buy" ratings, 10 "hold" ratings, and four "sell" ratings from analysts, with a median price target of $3.99.
from Business Insider https://ift.tt/3jUwc6n
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