HYMC stock has sparked curiosity after the biggest movie theatre chain company in the world, AMC Entertainment, acquired a 22% stake in the gold mining company, Hycroft.
The news from Adam Aron surprised both AMC shareholders and business personalities alike.
But AMC shareholders are on the fence about purchasing HYMC stock, although some have already jumped in headfirst.
In this article I’m going to go over the information that is currently available to the public.
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HYMC stock surges on AMC acquisition news
Hycroft Mining stock was trading only at $0.60 last week and earlier this year.
HYMC stock surged to $1 on Tuesday, March 8th and nearly $2 per share on Friday, March 11th.
Interestingly enough, HYMC’s share price began to surge a week prior to AMC’s official press release, which was published Tuesday, March 15th.
CEO and President of AMC Entertainment Adam Aron mentioned the company is going on offense which sparks much positive sentiment behind the surprising move.
It seems AMC could be hedging against inflation and a volatile market by investing in silver and gold.
Silver and gold have usually been used to hedge against depreciating assets during recessions and economic downturns.
It’s also very possible that AMC could be using Hycroft as a means to accelerate paying off their debt through investors.
This strategy could get AMC Entertainment out of debt quicker while leaving the company with additional cash in their war chest.
If AMC Entertainment is buying into this company, then it’s highly probable it will play in the company’s favor long-term.
Is HYMC stock shorted?
HYMC stock has a short interest of 21.99%, Utilization score of 100, and cost to borrow fee of $260.71.
You can view free daily short interest updates here.
On March 4th HYMC stock had a short interest of only 1%.
It looks as if information was leaked of AMC’s acquisition news because the short interest data began to increase only days before the official announcement was made.
Regardless, the stock became heavily shorted as soon as AMC Entertainment’s press release came out.
It’s very possible we begin to see ‘short and distort‘ campaigns with this new acquisition.
We’ve already begun to see platforms owned by News Corp. such as The Wall Street Journal, Barrons, and MarketWatch ridicule the acquisition.
These companies have long been intertwined with hedge fund narratives in a conflict of interest.
It’s safe to bet the same shorts betting against AMC Entertainment stock are the same shorts betting against HYMC stock.
Does this make HYMC a short squeeze play?
HYMC could see a gamma squeeze, but I don’t think it’s as strong as AMC to see a short squeeze.
This is rather speculative though and should warn investors of the risks involved below.
Hycroft could be an asset that will allow AMC Entertainment to cash out when needed to raise capital for the theatre chain.
If this is the case, it will be a great tool for AMC’s fundamentals in the long run.
However, it’s important to note that the company has complete control of what happens to the stock.
Hycroft released a prospectus stating the following.
“Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.“
The company may sell or dilute shares at any moment without advisory so there is risk.
Is HYMC stock a buy?
I would personally love for Adam Aron to provide investors with more information on the long-term plan with Hycroft.
At the moment it seems like it could be a cash cow to hedge against growing inflation and possibly yield liquidity to AMC Entertainment.
HYMC stock could be a good short-term trade while it’s still early.
One CNN Business analyst is forecasting HYMC stock to reach $13.00 over a 12-month.
According to 8 other analysts, the average price target is $13.26.
The market is unpredictable right now with so much short seller activity going on.
You’ll have to make a decision whether such a trade is worth losing if it has the potential to provide you with a 10x return.
Like any new news, tread cautiously and always have a strategy when investing in the market.
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I think you missed some big points on this- first, short interest is projected. The number of shares reported as short does not match what percentage ortex is showing. I find this odd as AMC seems to align accurately between reported shares short and SI. That’s not to say they’re wrong, but hard to calculate new shares short just from short volume. Based on reported shares short it’s under 1%.
Next, the share offering that was filed same day AMC announcement came out is for 500 million shares. That’s gonna dilute the price A LOT considering FF is currently 60M. Shorts won’t need to bother shorting as that offering is injected into the market.
Last, but not least, company fundamentals are very shaky on HYMC. They’ve bankrupt at least once, we’re used for a pump and dump scheme in 2013-2014. They do have one of the largest gold resources in the world, but the extraction method loses the majority of it. They are testing new methods but nothing will be in place in time to capitalize on current gold prices. It might be good investment for an institution, but I think retail should’ve done better DD before jumping in.
Between the share offering and company fundamentals, it’s a risky play that would be better to wait for the bottom of the dip.
Let’s start a discussion!