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Investing: WTF?!? People Are Heavily Trading AMC & Gamestop Stocks Because of Reddit

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People Are Heavily Trading AMC Stocks Because of Reddit
By Justin Curto
Photo: Noam Galai/Getty Images

b571e58421d71b4b71d1b422e1a71f0ccb-amc-theater.rsquare.w330.jpg


Like a scene out of The Big Short, or maybe The Wolf of Wall Street — some finance movie, you get the idea — AMC Entertainment has become one of the day’s most popular stocks through risky attempts to “short” the stock by hedge funds, according to CNBC. Basically, that means borrowing shares, selling them, then hoping to buy them back at a lower price before returning them to the lender. But why AMC, a movie theater chain struggling during the COVID-19 pandemic? Redditors on r/wallstreetbets tried to organize a buying effort in hopes of hurting the hedge funds that are trying to profit specifically off losses in stock value by companies like AMC, as The Verge explained. It’s the same reason why they targeted GameStop yesterday, and will probably target something weirder like, say, oh, Sea World tomorrow. But at the end of the day, we’re just an entertainment website, and this writer got a C-plus in his college economics class. Where’s Margot Robbie in a bubble bath to explain these things when you need her?
 
AMC share price quadruples as retail traders raid hedge-fund short targets
PUBLISHED WED, JAN 27 20218:15 AM ESTUPDATED WED, JAN 27 202111:47 AM EST

Pippa Stevens@PIPPASTEVENS13
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KEY POINTS
  • Shares of AMC Entertainment jumped more than 300% at the opening bell on Wednesday.
  • In addition to GameStop, individual investors are piling into other heavily shorted names, creating short squeezes.
  • Hedge funds that are short are rushing to cover losses.
  • Trading in AMC was halted several times during the first hour of trading due to volatility.
Street performers in Minnie Mouse costumes pass in front of an AMC movie theater at night in the Times Square neighborhood of New York, Oct. 15, 2020.
Amir Hamja | Bloomberg | Getty Images
Shares of embattled movie theater giant AMC Entertainment more than quadrupled at the opening bell on Wednesday amid a flurry of trading activity in some of Wall Street’s most shorted stocks.
About 10 minutes into the session, trading in the stock was halted for the first time due to volatility. Shares were halted several additional times during the first hour of trading amid heavy activity.

Ninety minutes into the session, it was trading 222% higher at $16.27. Earlier, it jumped as much as 310% just after stocks opened for trading. During premarket trading shares had been up as much as 360%.
Roughly one hour into trading more than 500 million shares had already changed hands — significantly above the stock’s 30-day average volume of 86.8 million shares a day.
Individual investors are creating short squeezes by piling into these names, while hedge funds that are short on the other side are rushing to cover their losses. They are promoting their activity on the wallstreetbets Reddit board, which has 2.8 million members. AMC appeared to be a growing topic of interest on the board.
Short selling is a strategy in which investors borrow shares of a stock at a certain price in expectations that the market value will fall below that level when it’s time to pay for the borrowed shares.
The influence of retail investors — most apparent in GameStop — has captivated the Street in recent days, and speaks to a new class of traders who grew up amid the pandemic. GameStop stock more than doubled on Wednesday, rising 110%.

“The spotlight has pivoted from Large Cap Tech/‘Retail Favorites’, to a largely ignored corner of heavily shorted smaller cap stocks,” Barclays said Tuesday in a note to clients. “In a span of a month, retail trading has significantly impacted price action and sentiment in these heavily shorted names, cementing the dominance of retail option investors.”
TD Ameritrade midday Wednesday said it put in place restrictions on certain transactions involving GameStop and AMC Entertainment “in the interest of mitigating risk for our company and clients.”
AMC has 24% of its float tied up in short interest, and GameStop’s short interest stands at 138%, according to FactSet.


AMC jumped 26% on Monday and 12% on Tuesday, and is now up more than 370% this week. On Monday, the company announced it had secured enough financing to remain open and operational deep into 2021.
“This means that any talk of an imminent bankruptcy for AMC is completely off the table,” said CEO Adam Aron.
For the month, AMC shares are up more than 650%. However, given the stock’s downward decline in recent years, a smaller gain now accounts for a much larger percentage move.
The fervor spread to some other heavily shorted names in early trading. Bed Bath & Beyond jumped more than 35%. According to data from S3 Partners, the retailer is the second most-shorted stock on the market, with 64% of its float sold short. Eastman Kodak, another speculative name, jumped 16%. Short interest in that stock is roughly 20%.
Amid the surge in AMC Entertainment, shares of AMC Networks were also on the move, advancing 15%. AMC Networks’ short interest stands at 60%, according to FactSet.
Short interest is the number of shares that are sold short relative to a company’s total available float of stock.
 
GameStop’s surge has made its 3 largest shareholders billions overnight
PUBLISHED WED, JAN 27 20219:53 AM ESTUPDATED WED, JAN 27 202111:17 AM EST

Robert Frank@ROBTFRANK
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KEY POINTS
  • GameStop’s parabolic stock surge over the past two weeks has created more than $2 billion in personal wealth for the company’s three biggest individual shareholders.
  • The chief beneficiary of the GameStop rise is Ryan Cohen, co-founder of Chewy, who owns 13% stake in GameStop.
  • The other big GameStop winner is Donald Foss, the 76-year-old founder and former CEO of Credit Acceptance Corp., a subprime auto lender.
  • GameStop CEO George Sherman has seen his 3.4% stake in the company jump to a value of about $350 million.
WATCH NOW
VIDEO03:32
Chewy co-founder wins big with GameStop investment

Call them the Reddit Rich.
GameStop’s parabolic stock surge over the past two weeks, driven partly by the Reddit Wallstreetbets crowd, has created more than $2 billion in personal wealth for the company’s three biggest individual shareholders. While it may not last long, the massive shareholder gains generated in such a short time give new meaning to the notion of instant wealth in the digital age.

The chief beneficiary of the GameStop rise is Ryan Cohen, co-founder of Chewy who made an investment in GameStop last year in an effort to help the company accelerate its push online. Cohen started buying shares of the video game retailer in August and added to his position in December. He invested a total of $76 million for a stake of about 13% of the company.
As of the market close Tuesday, Cohen’s 13% stake was worth more than $1.3 billion. So over the past two weeks, Cohen’s net worth increased an average of $90 million a day, or nearly $4 million per hour. Cohen couldn’t be reached for comment.
The other big GameStop winner is Donald Foss, the 76-year-old founder and former CEO of Credit Acceptance Corp., a subprime auto lender. Foss, who lives in Michigan, bought 5% of GameStop last February for about $12 million. His stake is now worth more than $500 million, bringing his total net worth to nearly $2 billion, according to Forbes. Foss couldn’t be reached for comment.
GameStop CEO George Sherman has seen his 3.4% stake in the company jump to a value of about $350 million.
So far, none the Big Three shareholders appear to have sold any stock. Several board members trimmed their holdings between Jan. 13 and 15, when the shares first started their rise. Those sales may have been part of preschedule selling programs.
GameStop was continuing its ascent Wednesday. It more than doubled and hit a fresh 52-week high of $354.83, before trimming its gains.
 
GameStop jumps more than 100% even as hedge funds cover short bets, scrutiny of rally intensifies
PUBLISHED WED, JAN 27 20218:31 AM ESTUPDATED WED, JAN 27 202111:44 AM EST

Jesse Pound@JESSERPOUND
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KEY POINTS
  • The latest move higher comes as some of the high-profile short sellers of GameStop, including Melvin Capital and Citron, announced that they covered most or all of their positions.
  • The stock appeared to get a boost in extended trading Tuesday after Tesla CEO Elon Musk tweeted out the link to the Reddit board where much of the discussion has taken place.
  • GameStop’s rapid rise has drawn comparisons to the speculative trading during the tech bubble of the late 1990s and led many Wall Street veterans to warn investors about the potential for significant losses.

Patrick T. Fallon | Bloomberg | Getty Images
Shares of GameStop surged again Wednesday, continuing the streak of wild swings for the stock as several high-profile short sellers said they had backed away from their positions.
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The name traded at roughly $342 per share when it was briefly halted at about 11:19 a.m. ET, up almost 131% from Tuesday’s close and giving the company a market cap of about $24 billion. The stock traded as high as $380 per share in premarket trading.

The latest move higher comes as some of the high-profile short sellers of GameStop, including Melvin Capital and Citron, announced that they covered most or all of their positions.
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The stock lost some of its premarket gains after the short sellers made their announcements, but the shares rebounded to new highs shortly before the market open.
GameStop’s nearly vertical surge over the past week has come as retail traders, many of whom have documented their moves on the social media site Reddit, have piled into the stock and call options. The spiking share price has helped to create a stock squeeze, where shorts and options dealers are forced to buy shares of a rising stock to cover their positions, resulting in a feedback loop that drives the stock even higher.
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The name appeared to get a boost in extended trading on Tuesday after Tesla CEO Elon Musk tweeted out the link to the Reddit board where much of the discussion has taken place.
The video game retailer, which had a market cap of less than $4 billion at the end of last week, was the most traded stock on the market by value Tuesday, according to Deutsche Bank strategist Jim Reid.

TD Ameritrade midday Wednesday said it put in place restrictions on certain transactions involving GameStop and AMC Entertainment “in the interest of mitigating risk for our company and clients.”
GameStop’s rapid rise has drawn comparisons to speculative trading during the tech bubble of the late 1990s and led many Wall Street veterans to warn investors about the potential for significant losses.
Hedge fund manager Michael Burry, who reported holding 1.7 million shares of the stock at the end of September, said in a now-deleted tweet that the rise was “unnatural, insane, and dangerous.” Burry also told Bloomberg News that he did not have a current long or short position in the stock.
William Galvin, Massachusetts’ top securities regulator, told Barron’s that the trading in GameStop could be “systemically wrong.”
Bank of America raised its price target on the stock to just $10 per share on Wednesday, saying in a note to clients that the increased share price could help GameStop’s turnaround plans but presented a risk for investors.
“While it is difficult to know how much very high short interest and retail ownership ... could continue to put upward pressure on shares, we think fundamentals will again factor into valuation,” the note said.
The Securities and Exchange Commission declined to comment to CNBC.
 
Reddit’s GameStop traders turn their attention to AMC stock
An online tug of war continues
By Tom Warren@tomwarren Jan 27, 2021, 9:33am EST

Share this story
Photo by Victor J. Blue/Getty Images
Reddit traders who have successfully profited off GameStop (GME) stock are now turning their attention to struggling movie theater chain AMC. Reddit board r/wallstreetbets has helped push GameStop stock to record levels in recent days, with the stock closing up 92 percent yesterday alone. It’s part of a chaotic, meme-fueled effort to create an organized short squeeze, and force traditional hedge funds into losing millions of dollars on their bets against struggling companies.
AMC appears to be next on the list. Overnight, online traders at r/wallstreetbets’ Discord server spent hours creating memes and spamming AMC emoji in an effort to convince thousands of people to buy AMC stock. Hundreds swarmed rapper Soulja Boy’s live Twitch stream in a failed endeavor to get him to tweet about AMC. At one point in an ongoing Discord call — with dozens of participants shouting profanity and racial slurs — traders thought Elon Musk was on the call. After many called for quiet and to “let Elon speak,” everyone soon realized it was just a prankster using a fake Elon Musk sound board.
It was a surreal moment in what has become the hottest online game.
AMC stock up more than 400 percent in pre-market trading.
The AMC memes appear to be working, though. During pre-market trading, AMC was up more than 400 percent at one point before opening up more than 250 percent. The movie theater chain has struggled with pandemic-related losses, but it did raise more than $400 million in financing on Monday to help it stay afloat through 2021.
Nokia, BlackBerry, and Bed Bath & Beyond are also seeing stock rises that are likely linked to this Reddit group. Nokia stock is currently trading up 63 percent, with BlackBerry up 17 percent, and Bed Bath & Beyond up 35 percent.

The mob of investors are taking part in this incredibly high-risk game in an attempt to punish hedge funds and professional financiers and make some quick cash. Thousands are buying into the idea of pummeling Wall Street professionals, and they’re using Reddit, Discord, Twitter, and Twitch to sell more people on gaming the system.
It works by targeting stocks that have a high amount of short selling attached to them, which is why GameStop and AMC are great targets after struggling through the pandemic. Short selling is a process that lets traders borrow shares for a fee and then sell them for a high price, and buy them back at a lower price to return them. Reddit is trying to force the price up so that investors, and especially hedge funds, that are short selling will lose lots of money as the stock rises. Read our full explainer on how Redditors are gaming GameStop stock.
IT’S A HIGH-RISK ONLINE GAME FOR MANY
It’s a risky game that highlights a bigger battle over the future of finance, and the idea that you can do anything online. The vast majority of Reddit investors are young and see hedge funds as the old school controlling stocks and shares and bullying companies into administration through their positions. As one poster on r/wallstreetbets put it, it’s “a tug of war between tradition and the future” that has gotten really personal. “We need to take the wealth back from these boomers,” said one member of the Discord call encouraging investment in AMC.
Investing and trading has also become incredibly easy for amateurs, thanks to apps like Robinhood. Millions have used Robinhood to make commission-free trades, and it’s a practice that has become popular during the pandemic with millions stuck at home.
This online trade game also has real life consequences. One big hedge fund, Melvin Capital, has been forced to close out of its GameStop position today with a huge loss expected, likely in the millions of dollars. It’s not clear if we’ll see the same sequence of events with AMC, but Reddit is trying to make it happen.
Update, January 27th 11:50AM ET: Article updated with information on other stocks seeing boosts.
 
I am mad at the investors on here who did not let the other niggas know what to do.

What fucking good are y'all?

We all could have profited but typical nigga shit. You dont want no one else getting money.

Mind you, if we got money then you would get money!!!!!!!

This is why there can't be black unity.
 
TENT said:
I am mad at the investors on here who did not let the other niggas know what to do.

What fucking good are y'all?

We all could have profited but typical nigga shit. You dont want no one else getting money.

Mind you, if we got money then you would get money!!!!!!!

This is why there can't be black unity.
Click to expand...

If you want to make money off investments you have to put something up front. tripling your money overnight won't do much if you only put $10 in the game.

With that said, do you really want to put big money into a tip you got off BGOL? Especially if you don't know why it's a good tip in the first place.

Your mad that other investors don't tell you what to do. Claiming that they keeping the money for themselves. But even the best investors get it wrong sometimes. Nobody wants to be responsible for you losing your life savings over a hot stock that didn't pan out.

However, if you really want to make money in the game here's what you do.

1) pay off all of your debts ASAP.

2) take the money you would have spent on interest and reinvest it into the S&P 500.

3) WAIT!
 
Bullshit white boy!

We got dudes like you monitoring us and keeping us down.

Then you go to reddit and get the tips and shit.

I aint falling for your BS.

You and your white friends be going to Aspen and shit.

You just dont wanna see niggas skiing.


Dannyblueyes said:
If you want to make money off investments you have to put something up front. tripling your money overnight won't do much if you only put $10 in the game.

With that said, do you really want to put big money into a tip you got off BGOL? Especially if you don't know why it's a good tip in the first place.

Your mad that other investors don't tell you what to do. Claiming that they keeping the money for themselves. But even the best investors get it wrong sometimes. Nobody wants to be responsible for you losing your life savings over a hot stock that didn't pan out.

However, if you really want to make money in the game here's what you do.

1) pay off all of your debts ASAP.

2) take the money you would have spent on interest and reinvest it into the S&P 500.

3) WAIT!
Click to expand...
 
Well months ago I told people to invest in bj warehouse stocks.. it was $25 a share last March.. it is currently $49 a share... just think people need food, products, and other things in bulk due to pandemic.. it is very similar looking to Costco just the name not as big.. the stock will keep going up due to more months of outbreaks and shutdowns... if you want to invest in something there you go
 
I found out last night but didn't know what to expect.

AMC and Gamestop are gimmicks they gonna correct themselves and be back to normal just as fast as they went up. Would hate for one if yall to get caught up in that.

Blackberry ($BB) is longerterm and will have natural growth. I personally think its gonna boom. The short version is they own the company "Baidu" that makes the maps so cars can drive autonomously. All cars that self drive will need it.

Also grab a weed stock cause they adding more states every year. $SNDL is cheap right now +/- 60cent but has longterm potential to hit $2,3,4 in a year or so.

If u don't know where to start and wanna watch some growth over time look into those.
 

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