AMC’s cost to borrow continues to rise.
In the past, we’ve seen how important this data has been regarding major price runup.
Not only does a high cost to borrow incentivize short sellers to close their positions, but it gets AMC one step closer to a squeezing.
In this article I’m going to break down the number figures and explain why the CTB and other data is pointing AMC in the right direction.
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Cost To Borrow explained
The cost to borrow is the average annualized percent (%) of interest on loans hedge funds have to pay.
AMC has approximately 190.44 million shares on loan as of the publication of this article.
Hedge funds are paying 15.55% annually on these loans.
This translates to $29.6 million per year, or $2.46 million per month.
In the meantime, it’s costing retail investors $0 to hold their positions in AMC stock.
Hedge funds will continue to pay more as AMC’s cost to borrow rises.
AMC’s current short interest is: 22.41%.
This is the percent of a company’s free float that is shorted.
AMC is a short squeeze play because of this number figure.
This number figures tells retail investors that there is a high interest in shorting the company stock.
It’s this data that allowed retail investors to foresee big price moves in January and in June of 2021.
This same data tells investors today that AMC has the potential to hit another all-time high.
Some of you might be familiar with the correlations between short interest and rise to $72 per share last year.
AMC’s short interest dropped from 23% to 20%, then to 14% when it ultimately skyrocketed in price from $14 per share to $72 per share.
Despite what mainstream media has said in the past, no, AMC’s short interest is not too low to squeeze shorts from their positions.
Will AMC’s cost to borrow force shorts to close?
Hedge funds may be incentivized to close their short positions in AMC stock as the cost to borrow increases. At some point, it’s not worth paying that high of a fee to continue shorting a company that has fundamentally improved.
AMC is no longer the same endangered company it once was during the pandemic.
The company has improved every quarter since 2021 and has managed to get rid of most of its debt.
The world’s largest movie theatre continues to innovate and adapt to the changing world.
While online streaming threatened the industry, revenue from box office hits has proved people are still going to the movie theatres, despite the convenience of watching movies at home.
Short sellers are betting against a recovering and innovating film industry generating billions in revenue now.
As AMC continues to prove itself fundamentally and the cost to borrow rises, expect short sellers to begin closing their short positions.
Here is where patient investors will see massive returns.
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