AMC’s short borrow fee rate has skyrocketed in the past months but is now reaching record highs.
Stonk-O-Tracker has reported 100,000 borrowed shares to have a whopping borrow fee rate of 731.8% on Wednesday specifically.
Ortex is reporting an average cost to borrow of 256.22% for AMC stock.
The movie theatre chain stock is getting very hard to short as fees skyrocket.
AMC’s high short interest of 23.18% 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 more than 44% in the past week and nearly 70% 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 Another AMC Squeeze Underway?
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.
However, if AMC Entertainment goes through a 1-for-10 reverse stock split, it’s likely we see a drop in buying volume due to the increase in share price.
But this doesn’t change the high cost to borrow the stock.
Short seller value doesn’t change, and they still remain in a situation where long investors have more control due to the cost to short AMC stock being very high.
These next few months will be very interesting for AMC Entertainment.
But I’m curious to know your thoughts.
Will AMC squeeze soon?
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