AMC has released a report warning shareholders from the risks of buying APE shares as the company gets ready to sell up to 425 million shares.
However, the report also warned short sellers of the possibility of an APE short squeeze.
APE traded below $2 on Friday despite strong shareholder sentiment.
The equity has an average trading volume of 19.8 million but has traded lower in the past week.
As the markets continue to tumble and short sellers double down on their positions, stocks such as AMC and APE also continue to take the heat.
But short sellers could be in for a big surprise.
All it takes is coordinated heavy trading activity to trigger massive price fluctuations, at least according to AMC Entertainment’s statement.
Let’s discuss it.
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AMC Issues Strong Short Squeeze Statement
I’ve touched topic on the warning AMC released for shareholders below as the company prepares to sell up to 425 million APE shares.
“Under the circumstances, we caution you against investing in our AMC Preferred Equity Units, unless you are prepared to incur the risk of losing all or a substantial portion of your investment,” said an official statement from AMC Entertainment.
However, the company also warns short sellers of a potential APE short squeeze, resulting in severe losses for those betting against the security.
“purchasers of our Class A common stock and AMC Preferred Equity Units could incur substantial losses if there are declines in market prices driven by a return to earlier valuations; to the extent volatility in our Class A common stock and AMC Preferred Equity Units is caused, or may from time to time be caused, as has widely been reported, by a “short squeeze” in which coordinated trading activity causes a spike in the market price of our Class A common stock and AMC Preferred Equity Units as traders with a short position make market purchases to avoid or to mitigate potential losses, investors purchase at inflated prices unrelated to our financial performance or prospects, and may thereafter suffer substantial losses as prices decline.”
In this passage here, AMC is warning both retail investors and short sellers alike of what a short squeeze could muster.
The losses for short sellers could be grand as coordinated trading activity causes a major spike in price.
For retail investors, buying the spike could cause significant losses as the stock enters a cooldown period.
What AMC is accepting though is the possibility of a short squeeze whether it be AMC or APE shares.
What Will Trigger a Short Squeeze?
According to AMC’s statement, a short squeeze is triggered by coordinated trading activity, resulting in share price spikes.
Volume was key in January when AMC surged to $20 per share, it was key when the stock skyrocketed to $72 per share in June, and it will be the key today.
The bear market is pinning stocks, but as the market reverses, it’s very possible we see a surge in trading activity in AMC (and APE) again like we did in 2021.
AMC surged in March when it’s weekly volume had surpassed 100 million.
The stock was halted but shares rose despite the market’s downtrend.
AMC’s current average trading volume is 41.2 million though it has been trading at only half.
Will retail investors be able to trigger AMC or APE to squeeze?
I’d love to hear your thoughts on this.
Leave a comment down below.
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Amc wants retail to keep believing in a squeeze so you buy ape and he sell apes for more FFS ,how is AA not in court yet!, He’s very careful with his wording but it doesn’t take a genius to read through it
I find it very interesting that AMC is now publicly stating about a possible short squeeze because they have to have very substantial evidence before their lawyers would let them release that. Also the differences are substantial between AMC and BBBY, AMC is not going out of business anytime soon.
ya, what report is the article referring to?
like all things in investing, you could be right one way,but, there’s always something to counteract price spikes. so, that’s what they end up being. Spikes.
the most well executed company (take your pick) plans all have a nemesis making it an excuse for share prices to tumble down.
So, the new norm is not value long term investing. You’ll be hard pressed to find very many companies you can invest $1,000 in today and it’ll be worth $300,000 in 10 years or so. now, the new norm is to pump & dump and the ones that are closest to the MMs, will make both ways (up & down) profits.
they will be selling to the next tier on the food chain which are those who can make profits one way (up or down) but not usually both. everyone else is a pawn chasing dreams of a lucky score and those who do are the next tier down.
All others are in that group that don’t make but lose to everyone and are the retail sucker giving away their money following false news of buy recommendations while the top two tiers are selling to them. then the price drops and they get out to cut losses and top tiers are buying back the shorts and Puts for handsome profits.
So a balance that starts keeps the price buoyant and top tiers start buying again to lure them back.
so, all they need to do is the opposite of what they think they should do. if they did they would turn this little rigged game upside down.
maybe then value investment will return
But, for now the value is stealing from the lowest tier. You can’t “get behind” a company and invest in its future because fundamentals for the most part have left the investment model that is far more instantaneous as far as returns go for the top tiers. The “longs” need to wake up quickly and don’t follow the great “recommendations” propaganda, but the opposite of what they are being led to do!
like all things in investing, you could be right one way,but, there’s always something to counteract price spikes. so, that’s what they end up being. Spikes.
the most well executed company (take your pick) plans all have a nemesis making it an excuse for share prices to tumble down.
So, the new norm is not value long term investing. You’ll be hard pressed to find very many companies you can invest $1,000 in today and it’ll be worth $300,000 in 10 years or so. now, the new norm is to pump & dump and the ones that are closest to the MMs, will make both ways (up & down) profits.
they will be selling to the next tier on the food chain which are those who can make profits one way (up or down) but not usually both. everyone else is a pawn chasing dreams of a lucky score and those who do are the next tier down.
All others are in that group that don’t make but lose to everyone and are the retail sucker giving away their money following false news of buy recommendations while the top two tiers are selling to them. then the price drops and they get out to cut losses and top tiers are buying back the shorts and Puts for handsome profits.
So a balance that starts keeps the price buoyant and top tiers start buying again to lure them back.
so, all they need to do is the opposite of what they think they should do. if they did they would turn this little rigged game upside down.
maybe then value investment will return
But, for now the value is stealing from the lowest tier. You can’t “get behind” a company and invest in its future because fundamentals for the most part have left the investment model that is far more instantaneous as far as returns go for the top tiers. The “longs” need to wake up quickly and don’t follow the great “recommendations” propaganda, but the opposite of what they are being led to do!
I have a dumb question. Let’s say the AMC stock goes to or near $0/share and the hedgies start to cover. If covering starts to happen, can it trigger a short squeeze? This is also hoping for the covering not taking place in the dark pools either.
What report?
I’m sure you are an expert.“Trust me bro” 👀
Is this a joke? Share dilution eliminates short interest. AMC wasn’t even heavily shorted to begin with (38% in 2021?) Bed Bath and Beyond was shorted more than AMC. Then AMC heavily diluted their shares which got rid of the short interest. AMC hasn’t changed anything noteworthy to their business. It’s not profitable and has a lot of debt. GME has no debt and is revolutionizing the gaming industry. How are you still pushing this bullshit narrative?
When historical implied volatility is low which it is, , And is rising at this time. Which it is also doing. Correlates with the rising price of AMC I think it’s an excellent buy signal.
But more GME
That statement applies to all traded stock preferred or not. It’s not specific to AMC or APE. If APE shares are worthless why does City Group want 425 Million shares worth. The Math isn’t Matching. Make it Make Sense. The problem hedgefunds are having is that Retail Investors aren’t selling their APE shares. Infact the lower Hedgefunds continue to short APE the more Retail Investors are buying and that turning APE into another AMC and Hedgefunds are waaaaaay beyond 425 shorted on AMC
Does the article mention when AMC will sale the 425 million shares?
…when the market reverse..?!?
You’re in for a big surprise if you think the market is going to be bullish soon.
Mark my words.
l was OUT a long time ago!
Good luck to you tough.
I look at it this way… I didn’t use money that should have been earmarked for necessities, it’s like when I would buy my coffees, once gone, all gone. So, I can wait for hell to freeze over. 😂
You’re just another “trust me bro” that can’t spell.
Let’s start a discussion! Leave your thoughts below.