AMC and other memes stocks drop Friday to wrap up a crazy week
AMC Empire 25 near Times Square is open as New York theaters reopen for the first time in a year after the coronavirus shutdown on March 5, 2021.
Angela Weiss | AFP | Getty Images
It’s been all week for AMC Entertainment and other memes actions as frantic trading inspired by Reddit’s discussion forums once again swept Wall Street.
These speculative stocks fell on Friday but still ended the week wild with massive gains.
AMC shares fell 6.7% on Friday after losing 18% in the previous session. The title still rose 83.4% over the week. Blackberry fell 12.7% on Friday, but gained 37.6% this week. Bed bath and beyond dipped 0.6%, but ended the week up 13.3%.
The original star of the Memes Store GameStop plunged 3.8% on Friday after gaining 111.9% this week. Trading has been relatively quiet for GameStop lately, as AMC has garnered most of the attention.
AMC is wasting no time in profiting from its massive rally and raising new capital. CEO Adam Aron asked shareholders during a live YouTube chat on Thursday evening to allow his company to issue up to 25 million additional shares. This came after AMC sold 20 million shares in two separate transactions over the past week, generating around $ 800 million in cash.
The first transaction involved Mudrick Capital, which paid over $ 230 million for 8.5 million shares. Then AMC revealed on Thursday that it had sold 11.5 million additional shares for $ 587 million.
The volume of trading on AMC and other memes stocks exploded this week as retail traders on the infamous WallStreetBets forum continued to encourage each other. AMC and Blackberry both traded more than 500 million shares on Thursday, becoming the two most active stocks on the Nasdaq.
The frantic trading has frustrated many Wall Street analysts who predict stock prices based on company fundamentals. Curtis Nagle, Bank of America analyst threw in the towel on Beth Bath & Beyond, moving the stock to a “no rating”.
“BBBY’s share price increase matches the big moves last week with ‘meme stocks’ like GME, AMC and BB,” Nagle said in a note to clients. “As a result, we are moving to No Rating because we believe BBBY stocks are no longer trading on fundamentals. Investors should no longer be relying on our previous investment opinion or price target.”
Bank of America also ended the GameStop coverage, citing a reallocation of resources.
Short coverage could be on the line again for these speculative names favored by traders on Reddit. AMC has about 18% of its float stocks sold short, compared to around 5% for an average US stock, according to data from S3 Partners. Short sellers betting against AMC suffered losses of $ 2 billion this week, according to data from S3.
“We have seen AMC short hedging this week, but by no means see a short sale on this security at this time,” said Ihor Dusaniwsky of S3 Partners.
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