There are people who don’t believe an AMC short squeeze will happen anymore.
Some will argue it already happened when AMC stock jumped to its all-time high of $72 per share.
And while yes, there were short sellers who were squeezed out in January when shares rose to $22 and again in June, AMC Entertainment continues to be heavily shorted.
In this article, I’m going to go over 5 undeniable signs that point towards the possibility of an AMC short squeeze.
So, whether people want to ridicule shareholders for firmly sticking to their convictions, you can’t argue with these facts.
TRusT mE bRo.
#1. AMC’s short interest is really high
A short squeeze requires a company to be heavily shorted, which AMC is.
AMC has a high short interest of 23%.
Did you know that before AMC’s share price surged from $14 per share to its all-time high of $72 per share it only had a short interest of 22%?
AMC’s short interest dropped from 22% to 14% as short sellers began to close their positions.
Well, I’m sorry to break it to skeptics, but AMC’s high short interest means there are shorts to squeeze.
I’d love to hear the rebuttal on this one; I don’t get the counterargument.
#2. There are millions of shares on loan
This ties back to AMC’s short interest data.
There are currently 185.14 million shares on loan, per Ortex.
These are shares that have been borrowed and not yet returned to the lender.
Hedge funds borrow these shares to short AMC stock.
At some point, these shares eventually have to be returned whether short sellers simply return them without necessarily selling them in the market, or through a ‘buy-back’ when closing their short positions.
Small spikes in AMC’s share price in correspondence with a drop in short interest suggests some short closing.
We’ve seen this on very high-volume trading days.
Now imagine all of these shares getting returned to the lender from shorts closing positions.
That’s a lot of buying power getting injected into the stock, forcing shares to spike.
Also known as a short squeeze.
#3. The cost to borrow AMC is higher than ever
The cost to borrow is the annual fee hedge funds are paying to borrow shares to short the company stock.
AMC’s current CTB is a whopping 217.56%.
Hedge funds are currently paying more than $30 million monthly in fees alone.
This lucrative fee alone could incentivize short sellers to ditch this play and close their positions.
#4. AMC Entertainment has the community to trigger big buying pressure
This is one of the biggest catalysts for an AMC short squeeze.
Because volume is what drove share prices up during the Wall Street Bets movement in GameStop, AMC, and other heavily shorted stocks at the time.
DFV knew that buying pressure is what would trigger spikes in GameStop, causing short sellers to run for the hills.
AMC shareholders replicated it in 2021, sending shares from $6 per share to $72 per share by literally buying every dip.
Yeah, it was wild -but it worked.
And shareholders haven’t left, they are still holding in 2023.
#5. The company isn’t going bankrupt
The short thesis made sense during the height of the pandemic when movie theatres were forced to close their doors to the public.
CEO Adam Aron said AMC Entertainment went from one day making millions per day to income suddenly halting due to the lockdowns.
But AMC Entertainment is no longer going bankrupt.
The company has improved and restructured its debt every quarter since 2021 and has beat earnings expectations ever since.
While the company does carry debt, Adam Aron has proved to be a master at raising cash from thin air.
Some of his efforts have included branded merchandise, the introduction of its equity APE, and through partnerships in the entertainment industry which Disney and Netflix.
The company is expected to launch a new credit card this year and put AMC branded popcorn in retail stores.
You can read more about AMC’s development’s here.
An AMC short squeeze isn’t as far-fetched as some might think
As you can see, there are no conspiracy theories or “what if’s”.
I’ve been documenting AMC’s short squeeze since 2021, shortly after shares rose to $22 per share and came back down in late January.
I witnessed months of momentum build until shares jumped to $72 per share.
And yes, it can be replicated.
Related: Will AMC Stock Squeeze in 2023?
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I just hope we can still maintain Adam Aaron’s sweet salary while he screws us. Heaven forbid if he cannot make it to a movie premiere.
Frank, Why would shorts sell now?They know relief is right around the corner, when we reverse split 90%of their problem is gone and then they willc short all over. Am I wrong?
What about the argument that these billion dollar hedge funds can keep paying out forever?
For point #3 I believe you are severely underestimating what it is costing them to borrow. The equation should be Shares on loan * price of share * interest for the yearly cost. So that would make the equation 188 million * $5.40 * 217.56% = $2.2 billion or $182 million monthly or @ $6 million daily.
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