The title climbed more than 50% higher on Thursday before parrying a bit. But this time, meme stock comrade
was not there for the ride.
AMC shares (ticker: AMC) rose 39% to $ 27.09 by mid-afternoon, after hitting a 52-week high of $ 29.75. GameStop (GME) stock fell 1.6% to $ 248.75. The performance gap is likely not due to divergent views on the business prospects of companies, but rather supply and demand quirks that are exaggerated by short interest, social media excitement, and momentum based trading activity.
“Just this past Monday, we wrote about a lot of the apparent foam that had been taken off the market, citing the reduction in apparent retail participation in particular,” Jacobson wrote in a note Thursday. “Since Tuesday afternoon however, we’ve seen a fairly consistent pattern of outperforming past (and current) retail favorites such as GME, AMC and others.”
As of Wednesday alone, 225,000 GameStop calls were exchanged, while 1.1 million AMC calls were exchanged – just behind the 1.3 million that were exchanged on Feb. 25, according to Jacobson.
According to users of Reddit forums such as WallStreetBets and AMCStock, the recent jump was hardly a failure. There, the posters are still waiting for the “MOASS”, that is to say the mother of all the little pressures. Some have speculated that bad players are trying to manipulate sentiment on stocks, hoping that retail investors will sell their stocks sooner. On the retail side, some users favor one or the other; Superstonk and GME subreddits are hubs for the GameStop discussion while AMCStock caters to movie chain shareholders.
People who watch AMC see June 2 as a key date. Registered shareholders will then be able to vote at AMC’s annual meeting in July. The company is asking shareholders to authorize the issuance of an additional 500 million shares – although CEO Adam Aron has pledged that if approved, AMC would not issue such shares during the 2021 timeline.
The meeting itself was delayed from May 4 because the company said it wanted to make sure its millions of individual shareholders had time to vote. The company said last week that at last count it had more than 3 million individual shareholders and no entity held more than 10% of the shares.
Unlike GameStop CEO George Sherman, who will be stepping down amid a larger management reshuffle, AMC’s Aron has wooed the online crowd. He pledged to issue shares in a lengthy interview with YouTube channel Trey’s Trades. He also said he and AMC would each donate $ 50,000 to the Dian Fossey Gorilla Fund. It’s the charity of choice for the Reddit crowd, which defines itself as a collective of “monkeys.”
“I’m pretty optimistic about AMC’s new shareholder base,” Aron said on an earnings call earlier this month. ” Keep on going
just go to Reddit, just go to YouTube, read what these people are writing. They love AMC. And these are not people who are just going to be investors in AMC. These will be AMC customers who come to our theaters and enjoy watching movies in our theaters as paying guests. “
What happens next is a guess. If AMC shareholders effectively vote to issue more shares, it would dilute existing shares and create more leeway for short sellers. But it would also help the company collect more much-needed cash.
GameStop and AMC may seem like a speculative distraction for investors making decisions based on earnings growth and other fundamental factors, but that doesn’t mean trading these stocks isn’t amazing to watch.