Meme stock traders rushed into the market yesterday, sending shares of movie theater chain AMC Entertainment (NYSE:AMC) up 80%. The buying continued overnight, with AMC stock doubling in value.
AMC opened this morning at $11.77 per share. It opened on May 13 at $3.50, and its market cap was up to $3 billion.
The gain was in line with those of other 2021 meme stocks. GameStop (NYSE:GME) also doubled overnight after Keith Gill, who tweets as “Roaring Kitty,” said on X the meme stock game is on again.
Party Like It’s 2021
The original meme stocks are sent higher by small traders organized against excessive shorting of stocks on sites like Reddit’s (NASDAQ:RDDT) r/WallStreetBets. Fintel reported that almost 19% of AMC’s float was sold short on May 14. However, it also saw many institutions closing out their “put” positions (a bet the stock price will fall) overnight.
While the AMC short interest is not considered excessive, stocks with the biggest short positions were also rising. Among these was SunPower (NASDAQ:SPWR), where 95% of the float was held short. It jumped almost 19% on May 13 and another 61% overnight. SunPower had a market cap of over $800 million early on May 14.
Gill himself posted a series of short videos on themes of violence and revenge. He finished with a summary of his bull case on GameStop.
Small traders were also dunking on critics, including this reporter. I wrote a negative story about AMC last week. My story had an error in overstating AMC’s debt. I also called it a “penny serenade.” Traders are singing “Hamilton” instead as the stock rockets over $10.
The math of the meme trading game remains the same. You make money so long as other traders are bidding the stock up. Once they sell, shares fall back to fundamental values, and those left holding them are out of luck.
AMC Stock: What Happens Next?
Don’t trust the signals bulls send on r/WallStreetBets. Your cue for when to get out will be in the trades themselves. If you can’t follow them closely, it’s best not to play. Good luck!
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
