AMC stock has taken the finance world by a storm. Redditors, along with new retail investors have flocked to the stock after GameStop’s (GME) first short squeeze occurred. Why AMC? The stock is heavily shorted which means retail investors can drive the price up to the moon.
AMC is currently trading at $55.00 as of June 7th. It tested levels as high as $77 too. The community is growing and more institutions are buying the stock. So, should you buy, hold, or sell AMC stock?
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Why is AMC price consolidating again?
AMC is experiencing a number of ‘short ladder attacks‘. This means investors who short the stock drive the price down by betting low on the stock for other short investors to borrow.
This repetition results in share price decrease, or consolidation as we’ve seen recently with AMC.
On the contrary, we’re seeing a lot of great things happen with AMC which should naturally drive the stock price back up again.
AMC Entertainment movie titles are outperforming one another. Movies are earning pandemic records in the millions of dollars.
Not only has AMC raised over 2 billion dollars in capital, but more and more institutions are buying and continue to add to their AMC position (via. MarketBeat).
What should retail investors do to counter these attacks?
Shorts eventually have to cover their positions which will result in a major loss for them, and a squeeze for retail investors. So, what should retail investors do in the meantime?
If you are looking to make a whopping trade like most people invested in AMC are, then you have two options:
- Hold your position – you hold real shares. Short sellers need to buy real shares at some point to pay back who they borrowed from. Do not sell.
- Buy the dip – If you’re still looking to increase your position in AMC, buying the dip is an opportunity to purchase the stock cheaper or average down.
Is it too late to buy AMC stock?
If you’re looking to buy the stock to potentially make a remarkable trade, now’s the time to buy the stock.
AMC’s recent price action has been caused primarily by fundamentals such as positive earnings reports and buying pressure. Large institutions are bulking up while they can so why shouldn’t the retail investor?
If you’re a novice retail investor I suggest you start off small and do your own due diligence. This will help you make a confident trade.
If you’re unfamiliar with Trey’s Trades be sure to check out this analysts videos on YouTube. He will catch you up with everything you need to know about AMC stock.
How high can AMC go?
You might have heard that AMC can go as high as $100 – $1K per share. While this is crazy speculation, it is certainly possible when you look at a further in-depth analysis as to why and how this can happen. Analysts have also concluded that AMC stock can go as high as $100K.
In theory, this can happen if retail investors continue to increase the volume of shares being bought and keep holding their positions.
This essentially creates a supply and demand scenario where the retail investors have the supply (AMC Shares) and hedge funds are stuck having to cover their positions (demand).
AMC gamma squeeze and short squeeze
When short-sellers cover, this will essentially create what is known as a gamma squeeze, or several gamma squeezes. This is where the price of a share rises unexpectedly or rapidly.
Well, you get more shorts to cover their positions and it ultimately leads to a short squeeze where the price of the stock skyrockets.
The reason redditors believe that AMC; with volume, can squeeze at least to $1K is because Volkswagen had a squeeze back in 2008 that did it. The volume was pumped by car manufacturer Porche along with the German government.
With enough retail investors and institutions getting in on AMC, a short squeeze is inevitable, even with all the manipulation.
When should you sell your AMC shares?
Everyone has different financial circumstances. If your family is going through hardship and you absolutely need to pull out then you should do what’s right for your family.
No one is going to shame you for that.
When you should sell also depends on what your trading goals are for this specific stock. Find out what it is you’re trying to accomplish by investing in AMC.
- Are you trying to make a little profit?
- Do you see yourself doubling your investment?
- Or can you see yourself cashing in a life-changing investment?
Make an honest assessment to find out what the best moves are for you financially.
How is AMC looking at the moment?
AMC is performing amazingly. Technical analysists are predicting AMC stock could begin to see it’s first $100 very soon simply from buying pressure.
We’re seeing a ton of momentum and short sellers haven’t even begun to cover their positions.
Roensch Capital is another one of my favorite analysts for this stock. This analyst goes a little more in depth with AMC’s performance and calls out healthy movements.
One thing analysts keep preaching is patience.
The stock market is a device for transferring money from the impatient to the patient.Warren buffett
If we think back on GameStop, the retail investors who made big buck are the ones who held the stock through both green and red days.
So, should you buy, hold, or sell AMC stock?
I personally like the stock. I’m in favor of buying and holding while the stock is still affordable.
Although a lot of the market is having a discount, analysts and myself included are more bullish than ever on AMC stock.
AMC reopens theaters across the U.S
AMC’s CEO and President, Adam Aron demonstrates nothing but positivity towards AMC chains across the United States.
AMC Entertainment has also raised over 2.2 billion dollars in cash and any talk regarding bankruptcy is off the table.
Movies we’re excited to see in theaters this year:
- Godzilla VS Kong Wed, Mar 31
- Mortal Kombat Fri, Apr 16
- A Quiet Place Part II Fri, May 28
- The Conjuring: TDMMDI Fri, Jun 4
- Black Widow Fri, Jul 9
- Candyman Fri, Aug 27
- Eternals Fri, Nov 5
You can check out a list of upcoming films on FANDANGO here!