AMC Entertainment soars in pre-market exchanges
Shares of US-listed movie theater operator AMC Entertainment rose 11% in US pre-market trading on Friday, signaling that the stock is on track for another solid session after the yesterday’s rocket performance.
AMC jumped nearly 40% on Thursday to close at $ 26.5 as investors on the popular Reddit WallStreetBets board actively pushed the action. Shares are now up about 1,160% year-to-date, the highest level at which the stock has traded since 2017.
At one point, the stock rose more than 20% in pre-market trading on Friday, breaking above the $ 32 mark.
Investors taking long positions in AMC are hopeful that moviegoers will return to theaters in large numbers, drawn to blockbusters such as Fast and Furious 9. They have also been encouraged by recent news that once the biggest Chinese group Dalian Wanda major shareholder of AMC, has sold its stake in the company.
Many have spoken of the movie operator’s actions on the popular Reddit board WallStreetBets as well as mainstream social media platforms like Twitter. Some of the comments posted seem to welcome the losses suffered by short sellers.
A recent comment on Twitter reads: “$ AMC exceeds $ 32, up more than 20% in pre-release, generating losses for #ShortSellers of $ 500 million in pre-release alone.” Total AMC $ losses this week are $ 1.75 billion so far. “
The Reddit WallStreetBets forum has been credited with much of the recent rally in stocks like AMC, a potential recovery game given economies reopening following coronavirus lockdowns and restrictions. Its community now has more than 10 million members. Other US-listed stocks that have been pumped by Reddit users this year include GameStop and BlackBerry.
On Friday, however, independent financial advisory firm deVere warned that many “vigilant investors” could end up “financially burnt” as part of a social media frenzy to buy such stocks.
âThere is a certain vigilance mindset among these traders who are drawn into this social media frenzy to pump certain stocks. They behave like activists, not like investors. Frankly, those pushing these stocks don’t seem to care about their increase – instead, they’re looking to destroy the sellers. High emotions, hype and hysteria and investing rarely go hand in hand. I can’t help but think that this is probably going to end in tears for many activist traders, âcommented Nigel Green, CEO and founder of deVere.
Read more: Gamestop, AMC Climb As Reddit Traders Launch New Squeeze Short
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