The AMC Empire 25 near Times Square is open as New York City theaters reopen on March 5, 2021 for the first time in a year since the coronavirus shutdown.
Angela Weiss | AFP | Getty Images
It was a full week for AMC Entertainment and other meme stocks as frenzied trading, inspired by Reddit’s chat rooms, swept Wall Street again.
These speculative stocks sway wildly on Friday but will still end the wild week with massive gains.
AMC stock last traded 2% higher on Friday after falling 18% in the previous session. The stock is still up nearly 100% over the week. Bed Bath & Beyond and BlackBerry were down 4% and 7%, respectively. BlackBerry is still up 45% on the week. Original meme stock star GameStop lost 2% on Friday after gaining 16% this week. Trading has been relatively quiet for GameStop as AMC attracted most of the attention.
AMC is wasting no time capitalizing on its massive rally and raising new capital. CEO Adam Aron asked shareholders in a YouTube live chat on Thursday evening to allow his company to issue up to 25 million more shares. It did so after AMC sold 20 million shares in two separate transactions last week, raising around $ 800 million in cash.
The first transaction involved Mudrick Capital, which paid more than $ 230 million for 8.5 million shares. Then AMC announced Thursday that it had sold an additional 11.5 million shares for $ 587 million.
Trading volumes in AMC and other meme stocks skyrocketed this week as retailers at the infamous WallStreetBets forum encouraged each other to pile up. AMC and Blackberry traded over 500 million shares on Thursday, making it the two most active stocks on the Nasdaq.
The frantic trading frustrated many Wall Street analysts, who predict stock prices based on company fundamentals. Bank of America analyst Curtis Nagle threw in the towel at Beth Bath & Beyond and gave the stock an “unrated” rating.
“The rise in BBBY’s share price corresponds to big moves over the past week in ‘meme stocks’ like GME, AMC and BB,” said Nagle in a statement to clients. “As a result, we are moving to No Rating as we believe BBBY stocks will no longer trade on fundamentals. Investors should no longer rely on our previous investment opinion or price target.”
Bank of America also stopped reporting on GameStop, citing a reallocation of resources.
With these speculative names favored by Reddit traders, short-covering could again be at play. According to data from S3 Partners, AMC has sold about 18% of its float stocks short, compared with about 5% for the average US stock. This week’s rally drove short sellers’ losses to more than $ 5 billion over the year, S3 data showed.
Did you like this article?
For exclusive stock selection, investment ideas and global CNBC livestream
Sign up for CNBC Pro
Start your free trial now