By Dhirendra Tripathi
Investing – AMC Entertainment (NYSE:AMC) shares rose another 28% Friday on top of a 35% gain a day earlier as Reddit traders can’t have enough of it.
According to Bank of America (NYSE:BAC) on Thursday, the stock has replaced GameStop (NYSE:GME) as the most popular stock on Reddit’s WallStreetBets forum. The two are part of the meme stocks gang that have developed a cult following.
GameStop shares were up over 1%.
Shares like AMC and GameStop have attracted heavy short-selling bets because of their struggles during the pandemic. But with small and enthusiastic traders coming together on platforms like Reddit and driving a trading frenzy, short sellers have had to rush to cover their positions, with panic buying only sending the shares higher.
This act has been playing with varied frequency over the last five months or so as retail traders band together to fight Wall Street giants.
The fundamentals of these companies don’t necessarily justify the valuations, but none cares when there’s unprecedented liquidity sloshing around.
AMC had to shut theaters last year and only recently has been able to reopen in its most important markets of New York City and Lost Angeles. The multiplex operator raised $428 million in equity at an average price of $9.94 per share in May. The shares are up more than two-and-a-half times since.
AMC has around $5 billion in debt and $450 million in deferred lease repayments.