AMC Entertainment‘s market capitalization eclipsed GameStop, its peer in the so-called meme stock trade, on Wednesday. But any way you slice the incredible rallies in these stocks, short sellers betting against them are down big.
AMC stock climbed 95% to $62.55 on Wednesday, bringing its market cap to $28.17 billion. GameStop jumped 13% to $282.24, hitting a $19.97 billion market cap. Shares of both companies have rallied amid heightened short interest, options volume, and enthusiasm from retail traders.
Ihor...
AMC Entertainment ‘s market capitalization eclipsed GameStop , its peer in the so-called meme stock trade, on Wednesday. But any way you slice the incredible rallies in these stocks, short sellers betting against them are down big.
AMC stock climbed 95% to $62.55 on Wednesday, bringing its market cap to $28.17 billion. GameStop jumped 13% to $282.24, hitting a $19.97 billion market cap. Shares of both companies have rallied amid heightened short interest, options volume, and enthusiasm from retail traders.
Ihor Dusaniwsky, managing director at the short selling analytics firm S3 Partners, told Barron’s he estimates AMC’s short interest was recently at 90.87 million shares, or about 18% of shares available for trading. He pegs GameStop’s short interest at 11.31 million shares or 19.8% of the float.
Dusaniwsky said short sellers betting against AMC were down $2.77 billion on Wednesday alone, bringing year-to-date losses to more than $5.22 billion. For GameStop, he estimates a loss of $375.7 million on Wednesday, and $7.15 billion in 2021.
Other meme stocks, including Bed Bath & Beyond (BBBY) and BlackBerry (BB), surged on Wednesday too.
The recent resurgence of meme stocks has once again brought mainstream attention to Wall Street. On Reddit investing forums such as WallStreetBets and AMCStock, the recent action has been celebrated as a win for the average person. But not everyone has been so enthused.
“I never would have believed it, but the recklessness of a segment of retail investors appears to have no bounds in this market,” Whitney Tilson of Empire Financial Research wrote in a note Wednesday. “This type of short-term rally is to be expected, and for stocks like these, this is an opportunity to add to a short or put position because it’s clearly a dead-cat bounce.”
David Trainer, CEO of investment research firm New Constructs, wrote that AMC’s business was trending in the wrong direction before the pandemic. Since then, he noted that AMC has diluted existing shares via millions in stock sales, adding that the stock is worthless considering its debt load and weak earnings prospects.
“The surge in shares of AMC Entertainment is yet another sign of the reckless meme stock-driven investing landscape that we find ourselves in today,” Trainer said. “Wall Street insiders are preying on the naivete of retail meme stock traders. There is no fundamental reason to be buying shares of AMC Entertainment.”
What’s ahead for investors is anyone’s guess. Calling a top for meme stocks has been a fool’s errand this year. But eventually, the fundamentals will need to catch up to the valuation.
Write to Connor Smith at connor.smith@barrons.com