AMC Entertainment (NYSE:AMC) has officially surpassed gains upwards of more than +100% in 2023, is AMC getting ready for a new all-time high?
The movie theatre stock hit $8.41 on Tuesday during the market open.
On January 3rd, AMC stock traded below $3.93.
AMC’s short interest has also gone up significantly this week alone, rising from 23% to nearly 26% on Tuesday.
Why does AMC’s short interest matter?
In this article, I go over the importance of this number figure and how it is one part of the equation to an AMC short squeeze this year.
But more on that soon.
Share of AMC Entertainment jumped to $72 per share in June of 2021, months after the first price runup in late January.
Shareholders were able to capitalize on the move to $20 during the ‘meme stock’ frenzy, and again months later when AMC reached its all-time high.
Will a third runup be the biggest one yet?
Let’s discuss it.
AMC’s Short Interest is Higher than It Was in June
That’s right, AMC’s short interest is now higher than what it was in June when the company stock surged to $72 per share.
AMC’s short interest was near 23% before we saw shorts begin to close some positions.
Today, AMC’s short interest is nearly 26% and has more than 197 million shares out on loan.
AMC’s shares on loan (shares borrowed to short the stock) have been steadily rising ever since the movie theatre stock peaked in 2021.
These are shares that will eventually have to be returned back to the lender through a market buy-back; causing share prices to rise.
See, short sellers were able to take advantage of extremely low fees to short the stock but have now come across an interesting issue.
The cost to borrow AMC stock has risen to astronomical numbers, currently going as high as 731% to borrow overnight.
Ortex is reporting the CTB at over 250%; a fee this high may cost short sellers several millions of dollars per month.
Also Read: What Happens if AMC’s CTB Keeps Rising?
Will AMC Stock Keep Going Up?
As I’ve mentioned in previous articles this week, AMC shareholders now have more runway to bring share prices up through sheer buying power.
Because short sellers cannot afford a 250%-700% borrow fee to short the stock like they used to.
This means some suppression in the share price has lifted — hence why buying power has been driving the price up this year.
AMC’s trading volume rose to more than twice its average trading volume of 35 million on Tuesday.
We did see the stock get short laddered which explains why we saw an increase in short interest, but it’s costing institutions a lot of money to do so.
Is buying time with an interest rate of 250%-700% worth it?
Short sellers may be stalling momentum from completely taking over, but eventually the pressure has to let off.
A rising short borrow fee and heavy buying pressure may just be the thing AMC needs to reach a new all-time high this year.
But I’m curious to know what you think.
Leave a comment down below.
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