Let's talk about what's happening with AMC stock, why it's going up in price, and what this means for you watching, whether you're just curious, or if you want to know whether or not it's too late to buy in. Enjoy! Add me on Instagram: GPStephan
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FIRST: AMC.
They’re the LARGEST movie theater chain in the WORLD, with almost 1000 locations, 10,000 screens, and 200 MILLION customers. However, some could say that those were the GLORY DAYS for AMC…because, throughout the mid 2000’s, home entertainment became more affordable, Netflix began taking marketshare away from more traditional outlets. BUT THEN…as if things weren’t bad enough…the Illness hit. AMC Theaters announced they were closing ALL locations across the US for 12 weeks, their box-office hit Trolls announced they were bypassing the movie-theater entirely for on-demand access, instead, and there were rumors that the movie-chain would soon be facing bankruptcy.
Well, in January of 2021…they were able to raise $917 MILLION DOLLARS from investors, completely taking the risk of bankruptcy off the table. It was at THAT TIME that users of Reddit’s WallStreetBets took to the community to make an effort to revitalize the beaten down company by buying up the stock, and causing the hashtag SAVEAMC to trend on twitter, resulting in the stock price increasing almost 500% in a few days.
But right now, AMC actually DOES have some legitimately good news behind them, HELPING fuel this surge in their stock price…for example, they just raised $230 million dollars by capitalizing on their recent momentum by selling an additional 8.5 million shares, with the intention of using that capital to take over other leases and fund renovations within their existing theaters. In addition to that, movie theaters made a HUGE COMEBACK this last weekend with over $100 MILLION DOLLARS in ticket sales…proving that, perhaps, movie theaters are sticking around for the long haul.
Listen, I know this is UNPOPULAR to talk about now, but think LOGICALLY and REALISTICALLY about your position, if you have one, and understand the RISKS involved in what you’re doing. At this point…it has NOTHING to do with the fundamentals of the company AT ALL…BUT, it has to do with a unique situation of a limited quantity of shares available, combined with hedge fund short seller interest, combined with retail enthusiasm to screw over the hedge funds, driving up the price of stock, causing more people to pile in, and - if all goes to plan - hedge funds will be forced to cover, causing it to go to the moon.
The difficult part just becomes: at what are people going to sell, and at what point are hedge funds going cover? Everyone just can’t buy and hold on forever, and for every $1 this increases, the temptation grows for buyers to start selling off. As responsible investors, we need to call it for it is: this is a highly speculative gamble that could make or lose you a lot of money, and you have to be prepared for either of those scenarios with a plan, ahead of time.
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