AMC Entertainment (NYSE:AMC) has become the #1 stock with the highest borrow fees according to S3 Partners.
S3 data reports AMC’s borrow fee at 142.57% but Ortex is reporting 213.95%.
Stonk-O-Tracker is currently reporting the borrow fee at 102% but recently showed hedge funds were paying as much as 731% to short AMC stock.
AMC’s short borrow fee rate has skyrocketed in the past months but is now reaching record highs.
Other company’s on the highest stock borrow fees list include Bed Bath & Beyond (NASDAQ:BBBY) with GameStop (NYSE:GME) last on the list.
AMC’s high short interest of 25.33% has short sellers in a sticky situation as rising borrow fee rates limit the amount of shorting in the stock.
Short sellers will have to make a decision to either stick to their convictions and remain short despite rising share prices.
AMC shares have risen nearly 60% this year-to-date.
Short sellers have now lost grip as the cost to short the stock has dramatically increased.
AMC’s short borrow fee is a serious pressure cooker as it incentivizes shorts to close their positions – more so as movie theatre shares continue to rise.
While the interest rate is not cumulative, today’s high interest cripples shorts and gives buyers runway for big volume to make a greater impact than it did last year when the fees were extremely low and could suppress shares from rising.
Is a Short Squeeze Looming for Borrowers?
All signs point to an AMC short squeeze this year.
AMC Entertainment has enough short sellers to create big buying pressure in a ‘buy back’ when closing short positions.
Combined with retail buying pressure, an AMC short squeeze today is highly probable.
How high the stock will jump to is unknown.
In 2021, AMC shares rose more than 3,000% when it peaked at its all-time high of $72 per share.
What we do know is that CEO Adam Aron plans to tackle the short thesis fundamentally.
On Twitter, Adam Aron responded directly to a user regarding AMC’s short thesis.
The user said, “Shorts attack companies they feel they can destroy. If you become a successful company you destroy a short’s thesis hence no logical reason to continue shorting. This is @CEOAdam strategy and the only strategy that has ever worked in the history of the market! #AMC#AMCSqueeze.”
To which the CEO answered:
“Joe, you nailed it. I could not have put it better myself”.
Looking at AMC’s Short Interest Today
S3 Partners is reporting AMC as the #1 stock with highest borrow fees but like Ortex, it also reports the company’s short interest.
AMC’s short interest per S3 Partners and Ortex data is nearly identical.
So, why does it matter?
See, AMC stock’s short interest data is a recipe for a short squeeze, something similar to what occurred in January and June of 2021.
Redditors saw AMC’s high short interest data could drive short sellers to close their positions by buying the stock as a collective.
Shares rose from $2 to more than $20 per share in January and from $9 to more than $72 per share later in June.
AMC’s short interest came down to 14% after the surge but began to rise again all throughout 2022.
Now the stock’s short interest is around the same as it was when shares spiked to its all-time high.
Will AMC have a short squeeze in 2023?
I’d love to know your thoughts — leave a comment down below.
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