The meme stock surge appears to be in high gear today. One of the favorite targets of r/WallStreetBets, AMC Entertainment (NYSE:AMC) is once again on the rise today. Currently, shares of AMC stock are trading roughly 20% higher on some bullish sentiment today among retail traders.
Why the momentum?
Well, it exists for a couple reasons. Let’s dive into what’s going on in the market today.
Meme Stocks Trading in Sync
Today, shares of fellow meme stock favorite GameStop (NYSE:GME) are up big. Currently, GME stock is up around 40% at the time of writing, recapturing most of yesterday’s losses. A relatively dismal earnings release coupled with a major shakeup of the company’s management team had investors spooked.
Recent news that eight of the company’s board members would be departing sent initial shockwaves through this stock. However, it appears investors are taking these moves as good news today. Retail investors seem to be hopeful that GameStop’s turnaround can be successful under the leadership of Ryan Cohen. Indeed, as the co-founder of Chewy (NYSE:CHWY), and also the lead behind the company’s turnaround efforts, investors are hopeful Cohen can help GameStop make a successful pivot to an online focus. Getting rid of the naysayers may be step one.
The correlation between stocks like GME and AMC of late appears to be a key driving factor for these stocks that now trade as a group. Investors watching one are watching all, it seems.
AMC Stock Is Getting a Boost from Theater Reopenings
AMC stock is a turnaround play, based on the idea that theaters will reopen sooner than later. When announcements such as today’s make headlines, investors appear ready to ramp up the bullish outlook on stocks like AMC.
Key markets such as Los Angeles and New York are now open for viewings. I mean, that’s a great thing for movie-lovers. However, investors in movie operators like AMC view this as a much bigger deal. Why?
Well, these lucrative markets are key drivers of volume for AMC. These are also often considered bellwether markets that have drive decisions made in other smaller, but important, cities as well. Indeed, investors appear willing to bet on a mass-reopening is underway.
On the date of publication, Chris MacDonald held a SHORT position in GME and AMC.
