AMC Entertainment (NYSE:AMC) has now ranked #2 with the highest cost to borrow in the entire market.
The movie theatre chain made Companies Market Cap list of top 100 companies with more than 7,600 companies on the list.
AMC currently has a rising cost to borrow of 977.391% per CMC but has reached a max CTB of 1,006% per financial analytics firm Ortex.
The cost to borrow, per Ortex, is the annualized percent of interest on loans, typically borrowed by brokers and hedge funds.
Hedge funds have been paying a large borrowing fee to short AMC Entertainment stock, though some investors would argue that institutions aren’t paying anything at all due to heavy amounts of ‘naked short selling’.
Naked short selling is the illegal practice of short–selling shares that have not been affirmatively determined to exist.
Companies such as Mullen Automotive, FingerMotion, and Meta Materials have opened cases against the illegal practice through Christian Wes, who says ‘naked shorting’ has become a worldwide problem.
Ultimately, a high cost to borrow may incentivize short sellers to close their positions which in AMC’s case may trigger an AMC short squeeze.
AMC’s short interest has also been steadily rising as more shorts begin to pile in on the company stock.
However, this puts short sellers at a risk as we’ve seen in 2021 during the ‘meme stock’ frenzy.
“As the broader stock market has been on a tear for about a month, things are looking grim for investors with big short positions in stocks like AMC Entertainment Holdings Inc. and GameStop,” said Ihor Dusaniwsky, head of predictive analytics at financial technology and analytics firm S3 Partners.
AMC Entertainment’s Short Score is Now at 95
AMC’s short score is now at 95 as reported by Global Financial Analytics firm, Ortex.
According to Ortex, ‘Short Score’ uses a multi-factor model that incorporates multiple short-related metrics, with a higher score indicating that the stock is heavily-shorted and has other characteristics that increase the possibility of a short squeeze occurring.
AMC Entertainment was able to squeeze short sellers twice in 2021; first in January and then again in June.
However, short interest amongst Wall Street has not wavered which means a short squeeze is still very much possible today.
AMC’s current short interest is sitting at 22.50%, around the same short interest the company had in 2021 when shares exploded between $6 -$9 per share to its all-time high of $72 per share.
The analytics firm has also listed the world’s largest movie theatre chain on its top 10 list of most likely ‘short squeeze candidates’.
“One factor that is also killing profits for short sellers is the borrowing costs on stocks that no one is willing to part with,” says S3 Partners.
Short sellers paid $1.91 billion in short borrow fees during the first quarter of 2023.
Today, AMC stock is up more than +11% this year-to-date but down more than -70% in the past year.
Do you think AMC Entertainment will squeeze this year? Leave your thoughts in the comment section down below.
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