The stock reached record levels as the ‘memestock’ saga is far from being over
The AMC Entertainment Holdings Inc (NYSE:AMC) story is far from being over as shares nearly doubled with retail investors being wooed with free popcorn.
The cinema operator closed up 95.2% at US$62.55 on Wednesday, with the stock climbing further in after hours trading to US$68.
According to the latest closing price, the ‘memestock’ is valued at US$28bn.
In what seemed a nod to the brigade of Reddit traders, chief executive Adam Aron announced that US-based shareholders will receive free large popcorn alongside other “special offers” when signing up for the company’s updates.
Unfortunately, international investors can still sign up but they won’t receive snacks for now.
ccording to analysts, the share price surge may be due to the freebie news and the subsequent social media publicity.
“But the swell under the share price has been gathering for some weeks as investors searched out re-opening stocks which could benefit from the easing of social restrictions. Add into the mix strong takings for cinemas over the weekend and a possible loss of appetite for crypto investments following recent falls, and the swirl of interest has intensified,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“There is also a legacy effect from the revenge saga which played out earlier in the year with AMC one of the stocks targeted by activist investors, in a bid to create big losses for short sellers. With AMC still a target for investors betting that the stock is way over-valued, it seems battle lines have been drawn again and a fresh short squeeze is again on the cards. AMC has been cashing in on the intense interest and sharp rises in its share price over recent months by selling more shares, shoring up its once precarious financial position.”
“We would advise investors to proceed with caution and avoid following the herd into hot stocks which are the subject of frenzied speculation. It is a highly risky strategy and people should only dabble at the edges of their portfolio with money they can afford to lose.”