If you’ve been following the stock market news you’ve probably heard of all the hype surrounding AMC stock and GME (GameStop).
It wasn’t long before traders flocked over to AMC after the massive gains GameStop yielded due to the high percentage of shorting within the stocks.
Shorting a stock is the process by which sellers essentially bet on the stock price to drop.
They borrow stocks at higher cost, sell it, and buy back the stock low, profiting the difference.
Well, investors over at r/wallstreetbets found that by purchasing stocks at low price in heavy volumes it would drive a short squeeze.
A short squeeze occurs when a stock jumps sharply higher, forcing short sellers to buy higher, causing them to lose money.
Lots of it.
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Will we see a squeeze with AMC?
There are numerous news that lead traders and investors alike to predict an upcoming short squeeze like we saw with GME (Gamestop).
- CEO of AMC announces AMC is no longer going bankrupt (via. Los Angeles Times)
- Vanguard, Wells Fargo, BMO Harris, BlackRock, Fidelity and many more institutions are buying AMC stock while it’s low (via. CNN Business)
- AMC is currently the most shorted stock (via. MarketWatch) Unfortunately MarketWatch has hidden AMC from their list. Retail investors suspect foul play.
- AMC is also currently one of the most held stocks surpassing Apple (AAPL) and Tesla (TSLA) (via. Nasdaq)
- More publicity and awareness has average people investing in AMC which is driving volume for a potential squeeze
Big institutions keep buying AMC stock
We’re seeing huge institutions are investing in AMC stock while it’s affordable.
And because it’s affordable, we’re also seeing average people invest in this stock.
As long as the stock is being held, though lows and through highs, a squeeze like we saw with GME (GameStop) is certainly possible.
AMC stock closed at $14.48 on July 7th. The stock has been on discount.
However, the community sentiment remains bullish meaning retail investors keep buying and holding the stock to squeeze shorts from their positions.
Shorts continue to short ladder the stock causing the downtrend we’ve been seeing.
But AMC wants to keep climbing.
As long as AMC shareholders continue to hold and buy the dip, short investors are at a disadvantage.
Great news for AMC Entertainment (Archive Data)
Other news that can further drive the share price of AMC stock is the announcement that most AMC theaters have now begun to open up.
AMC’s short borrow fee as of 7/7 is 11.40%, via. Stonk-O-Tracker.
The fee is going up after being down for many months.
What is a short borrow fee?
The short borrow fee is the interest shorts pay for borrowing shares of AMC stock.
This means shorts are losing money every day by not closing their positions.
A surging short borrow fee rate could incentivize shorts to close their positions due to higher borrowing costs.
Why the short borrow fee rate matters
It costs shorts interest to hold while it costs the retail investor absolutely nothing to hold.
Shorts are losing money every day they hold because of this interest fee for borrowing the stock.
For some reason shorts still think AMC Entertainment can go bankrupt, although they have enough money to continue doing business.. I know, I don’t understand this either.
As hedge funds like Citadel lose money, the short borrow fee only increases those losses.
AMC’s share price might be on discount right now, but hedge funds are experiencing losses on top of losses.
They’ll eventually have to close their short positions, will you miss it?
How high can AMC stock go up to?
Because we’ve seen a lot of suppression in the market, many traders are anticipating AMC stock can get as high if not higher than GME (GameStop).
This of course is just speculation as both stocks are heavily shorted and more people and institutions alike are buying and holding the stocks.
There’s a notion that all these suppressed gains will result in a massive short squeeze in the coming months.
So, is it too late to purchase AMC stock?
The price after a short squeeze eventually fall back down and level out, but this will take time.
With AMC stock trading below $100, now could be the perfect time to buy.
Despite what corporate media is pushing, AMC’s growth tells us the stock is undervalued.
But most importantly, big shorts have not covered.
Just don’t wait too long because we hear it’s going to the moon.
Hedge funds continue to short AMC and the volume is increasing; it’s the perfect storm for a short squeeze.
Things to expect in the market with AMC
- Volatility followed with an upward trend in price action
- Short-ladder attacks
- Headlines advising you to trade in something else
- Hedge funds to lose a lot of money
- More retail investors buying this stock right now
- A series of gamma squeezes
- And, a highly potential short squeeze that can happen at any time
How many AMC shares should I buy?
If you’re planning on taking a position in AMC Entertainment set a budget for investing.
Since the market is volatile at the moment, purchase shares incrementally.
The best time to buy a stock is when the share price has dipped.
This will allow your investment to see gains when the stock price rises again.
Ladies and gentlemen, the last thing you want to do is to invest more than you can handle to lose.
This advisory must be made.
If you’re holding AMC stock leave a comment below and let me know what a short squeeze would mean for you.
Retail investors can feel it, the tendies are coming.
Where can I invest in AMC? What’s a good platform?
If you have not opened a brokerage account to begin investing, read how to invest in the stock market (step by step).
While the US investors over at r/wallstreetbets use Robinhood, it’s not available if you live in Canada.
Instead, you can use WealthSimple Trade or InteractiveBrokers
In this post you will see a number of linked platforms that you can check out!
I personally use Vanguard.
Vanguard has proven to be useful, and it has never failed me before.
It is important to note that I am not a licensed financial advisor.
Like many traders and self-taught investors, all speculation is based on educated estimations based on highly reliable analysis, patterns, and documented news charts.
On another note: It would be wise to not invest more than you can afford to lose. In other words, invest money you would be okay with losing for simpler terms.
Ignore the bogus headlines from The Motley Fool and other sources
AMC and r/wallstreetbets have been given lots of negative press from the likes of The Motley Fool and other sources; shaming the purchase of the stock.
Fortunately, we’ve been backed up by Mark Cuban, Chance the Rapper, and other big names.
Influential outlets with powerful hedge fund partners (institutions who short the stock) have been attacking traders and investors by providing false information wherever they can.
What we’re seeing right now is that the big guys are losing money due to the price of shorted stocks going up.
They will say and do whatever they can to divert the public from trading this stock.
My personal suggestion to you is to not let these sources intimidate you.
Do your research to see how the stock price has been manipulated through bogus headlines and short-ladder attacks.
Not to mention, the complete halt of trading AMC stock by Robinhood.
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