AMC Entertainment (NYSE:AMC) stock has reached a max cost to borrow of more than 1,000% (1.03k%), per Ortex data.
AMC’s cost to borrow average is currently reported at 928%, respectively.
The cost to borrow, per Ortex, is the annualized percent of interest on loans, typically borrowed by brokers and hedge funds.
This percentage figure may change on a daily basis and level out through its ‘cost to borrow average’.
According to the Securities Lending Agreement (SLA), this fee must be charged prior to the stock being borrowed.
Short sellers rely on brokers to have stock shares available to borrow.
If the broker has very few shares of a stock available, then that stock is placed on the hard-to-borrow list, a list AMC Entertainment is currently on.
Stocks on the hard-to-borrow list may not be short-sellable or have higher stock loan fees, hence why we’re seeing AMC’s cost to borrow at 1,000%.
AMC Entertainment is in high demand, both for short sellers and long investors.
But with fees this high, is it really worth shorting the movie theatre company?
Here are the latest developments happening with AMC Entertainment.
AMC Breaks Record for Busiest Weekend
AMC Entertainment recently announced that the company had its busiest weekend of 2023 and the company’s third busiest weekend since December 2019.
New movie titles in April have flooded AMC movie theatres across the country.
This is a trend we’ve seen in AMC Entertainment from time to time post-pandemic.
“WHAT A WEEKEND. It’s official. Record revenues for AMC at our U.S. theatres on Easter weekend thanks to strong attendance and superb food and beverage sales. 3.6 million people watched Mario, Air Jordan and more stories on the big screen at AMC! The path to recovery continues,” said the CEO on Twitter.
AMC Entertainment made the following statement:
“AMC, the largest theatrical exhibitor in the United States and the world, today announced it enjoyed its busiest weekend so far in 2023, as more than 3.6 million guests attended a movie at an AMC location in the United States from Friday to Sunday.
The strong audience turnout gave AMC its third busiest Friday to Sunday weekend since December of 2019.
Since reopening in 2020, two of AMC’s top three revenue days occurred this past weekend, including Saturday, which was AMC’s highest revenue day in the United States since theatres reopened.
The weekend attendance was driven by a slate of titles that appealed to a broad range of moviegoing audiences, led by the opening weekend of THE SUPER MARIO BROS. MOVIE, which set box office records of its own this weekend.
New release AIR, and strong holdovers from DUNGEONS AND DRAGONS: HONOR AMONG THIEVES and JOHN WICK: CHAPTER 4 also helped drive weekend attendance.”
Amazon and Apple Contribute Billions to Movie Theatre Industry
Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) are now contributing billions of dollars to the movie theatre industry.
“Experts are now projecting that ticket sales will be off about 15% from before the pandemic (with 15% less product) and just about every studio is ramping up output.
After years of negotiations and failed experiments, theater chains and movie studios have reached something of a truce.
Studios will debut most of their movies in theaters and can now make them available at home within a few weeks,” says Bloomberg.
Amazon Studios had its first-ever original movie debut in theatres globally on April 5th, 2023.
AIR tells the story of the game-changing partnership between Nike and a then-rookie named Michael Jordan.
Insider information surfaced in November last year that Amazon was planning to invest billions of dollars in the movie theatre industry.
This is the largest commitment to the movie theatre industry by an internet company, says Bloomberg.
Aside from Amazon, Apple’s investment will bring AMC Entertainment more revenue in theatrical releases.
AMC CEO Adam Aron says that the only challenge the theatre chain currently faces is not having enough movie titles to premier.
The investment by Amazon and Apple is a massive win for AMC.
Apple’s investment is part of the tech company’s efforts to raise its profile in Hollywood and lure subscribers to its streaming service, Apple TV+, Bloomberg reported, citing people familiar with the matter.
Why Does AMC Stock Keep Getting Shorted?
AMC Entertainment continues to get plummeted by Wall Street, but why?
Movie theatres are no longer dead, and AMC Entertainment is no longer on the brink of going bankrupt.
Giants Amazon and Apple are now investing billions of dollars in the movie theatre industry, which is going to bring more movie titles to cinemas across the country including industry leader AMC Entertainment.
Today, AMC’s short interest is high at 25.06%.
AMC’s cost to borrow has surged as high as 1,000% — showing a scarcity of shares to borrow and a high demand to short the stock.
CEO Adam Aron has stated that the only thing the company needs to enter profitability again is more movie titles, and they’re coming.
So why does Wall Street continue to overleverage themselves and fight the movie theatre chain?
I’d love to hear your thoughts in the comment section below.
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I agreed to join Fidelity’s share lending program. They took all my KOSS shares and some of the AMC shares.
Is there any risk of losing the shares if MOASS happens all of sudden?
They keep shorting Amc because they have to. They wanted to bankrupt it but failed and now have no way to close all their shorts so they will continue to short it because if they don’t the price will shoot up and they will get margin called.
With so many FTD’s on AMC, who really cares about CTB? all this time, 2 years, we’ve had fairly high CTB’s, and basically NO impact on price.
The reason I would short amc (which I wouldn’t) is you bet they can’t handle the 5 billion in debt or you think the price will decline with reverse split and then dilution. That would be my only reason to continue to short otherwise they are playing with fire with this CTB.
With the interest rate soaring to 1000%, why are the AMC shorts still increasing?
Because they have No plans of covering. don’t need to, as evidenced over the last 2 years.
Leave your thoughts below.