Market News Today – AMC Reverse Stock Split on Hold Until After Lawsuit Clears.
Shareholders have approved an AMC reverse stock split as well as the conversion of APE equity to common AMC stock, but CEO Adam Aron says they cannot implement the proposals until the Delaware lawsuit clears.
“Today was a huge step forward for AMC. You voted YES, YES & YES! And it was a landslide vote too — 88% yes for Proposal 1, 87% yes for Proposal 2, and 87% yes for Proposal 3. My sincerest thanks for giving AMC the tools we need to continue fighting the good fight on your behalf.
Saving AMC is my professional mission. And remember that I own millions of AMC shares and APE units too. So, I very much want for AMC to succeed. I am absolutely and passionately convinced that what you approved today is in the best interests of AMC and of all our shareholders.
So what happens now? We can not implement what you approved today until the litigation in Delaware courts is resolved. The next Court hearing on this matter is set for April 27, 2023. We will update stockholders when we have additional information.”
The 1-for-10 reverse stock split will divide shares by 10 and multiple AMC’s share price by 10.
For example, with AMC’s current share price today at $4.60, the stock price will reflect $46 but shareholders holding 100 shares will now hold 10 shares.
Investors holding 1,000 shares of AMC stock will hold 100 shares after the reverse split.
Allegheny County Employees’ Retirement System filed a lawsuit against AMC Entertainment (NYSE:AMC) claiming that the company and several of its directors violated state law to “eviscerate” the voting power of common stockholders, who had not supported issuing new shares.
The Purpose Behind a Reverse Stock Split
Market News Daily – AMC Reverse Stock Split on Hold Until After Lawsuit Clears.
AMC Entertainment, while it’s improved drastically over the past two years, continues to burn cash.
Developments such as AMC Perfectly Popcorn and branded merchandise are just two innovations the company has created to increase revenue.
While the developments are still new, AMC needs big cash quick, which is why a reverse stock split and APE merge was proposed.
An AMC and APE merge will combine the value of both the equity and common stock of the company.
A reverse stock split will buy the company time and stay listed on the NYSE as short sellers continue to drive shares down — this time from a higher share price than current levels.
The approved proposals will dilute the stock by increasing the number of shares from 524,173,073 to 550,000,000.
This gives AMC Entertainment millions of shares to liquidate as soon as they hit the market, allowing the company to raise big cash once again.
However, the reverse stock split now makes it 10 times more challenging for shareholders who got in at the peak of 2021 to break even.
Shareholders will have to repurchase 10 times their shares to be unaffected by this type of dilution.
This repurchase may have the potential to move stocks up, but at a hefty cost.
Other company’s on the highest stock borrow fees list include Bed Bath & Beyond (NASDAQ:BBBY) with GameStop (NYSE:GME) last on the list.
AMC’s high short interest of 25.33% has short sellers in a sticky situation as rising borrow fee rates limit the amount of shorting in the stock.
Short sellers will have to make a decision to either stick to their convictions and remain short despite rising share prices.
AMC shares have risen nearly 60% this year-to-date.
Short sellers have now lost grip as the cost to short the stock has dramatically increased.
AMC’s short borrow fee is a serious pressure cooker as it incentivizes shorts to close their positions – more so as movie theatre shares continue to rise.
While the interest rate is not cumulative, today’s high interest cripples shorts and gives buyers runway for big volume to make a greater impact than it did last year when the fees were extremely low and could suppress shares from rising.
Is a Short Squeeze Looming for Borrowers?
Latest AMC stock news 2023.
All signs point to an AMC short squeeze this year.
AMC Entertainment has enough short sellers to create big buying pressure in a ‘buy back’ when closing short positions.
Combined with retail buying pressure, an AMC short squeeze today is highly probable.
How high the stock will jump to is unknown.
In 2021, AMC shares rose more than 3,000% when it peaked at its all-time high of $72 per share.
On Twitter, Adam Aron responded directly to a user regarding AMC’s short thesis.
The user said, “Shorts attack companies they feel they can destroy. If you become a successful company you destroy a short’s thesis hence no logical reason to continue shorting. This is @CEOAdam strategy and the only strategy that has ever worked in the history of the market! #AMC#AMCSqueeze.”
To which the CEO answered:
“Joe, you nailed it. I could not have put it better myself”.
Looking at AMC’s Short Interest Today
S3 Partners is reporting AMC as the #1 stock with highest borrow fees but like Ortex, it also reports the company’s short interest.
AMC’s short interest per S3 Partners andOrtex data is nearly identical.
So, why does it matter?
See, AMC stock’s short interest data is a recipe for a short squeeze, something similar to what occurred in January and June of 2021.
Redditors saw AMC’s high short interest data could drive short sellers to close their positions by buying the stock as a collective.
Shares rose from $2 to more than $20 per share in January and from $9 to more than $72 per share later in June.
AMC’s short interest came down to 14% after the surge but began to rise again all throughout 2022.
Now the stock’s short interest is around the same as it was when shares spiked to its all-time high.
Market News: Can AMC stock still squeeze? Here’s what the data says.
There are people who don’t believe an AMC short squeeze will happen anymore.
Some will argue it already happened when AMC stock jumped to its all-time high of $72 per share.
And while yes, there were short sellers who were squeezed out in January when shares rose to $22 and again in June, AMC Entertainment continues to be heavily shorted.
In this article, I’m going to go over 5 undeniable signs that point towards the possibility of an AMC short squeeze.
So, whether people want to ridicule shareholders for firmly sticking to their convictions, you can’t argue with these facts.
TRusT mE bRo.
#1. AMC’s short interest is really high
A short squeeze requires a company to be heavily shorted, which AMC is.
These are shares that have been borrowed and not yet returned to the lender.
Hedge funds borrow these shares to short AMC stock.
At some point, these shares eventually have to be returned whether short sellers simply return them without necessarily selling them in the market, or through a ‘buy-back’ when closing their short positions.
Small spikes in AMC’s share price in correspondence with a drop in short interest suggests some short closing.
We’ve seen this on very high-volume trading days.
Now imagine all of these shares getting returned to the lender from shorts closing positions.
That’s a lot of buying power getting injected into the stock, forcing shares to spike.
Also known as a short squeeze.
#3.The cost to borrow AMC is higher than ever
The cost to borrow is the annual fee hedge funds are paying to borrow shares to short the company stock.
Hedge funds are currently paying more than $30 million monthly in fees alone.
This lucrative fee alone could incentivize short sellers to ditch this play and close their positions.
#4. AMC Entertainment has the community to trigger big buying pressure
This is one of the biggest catalysts for an AMC short squeeze.
Why?
Because volume is what drove share prices up during the Wall Street Bets movement in GameStop, AMC, and other heavily shorted stocks at the time.
DFV knew that buying pressure is what would trigger spikes in GameStop, causing short sellers to run for the hills.
AMC shareholders replicated it in 2021, sending shares from $6 per share to $72 per share by literally buying every dip.
Yeah, it was wild -but it worked.
And shareholders haven’t left, they are still holding in 2023.
#5. The company isn’t going bankrupt
Is AMC a short squeeze play? Can AMC still squeeze?
The short thesis made sense during the height of the pandemic when movie theatres were forced to close their doors to the public.
CEO Adam Aron said AMC Entertainment went from one day making millions per day to income suddenly halting due to the lockdowns.
But AMC Entertainment is no longer going bankrupt.
The company has improved and restructured its debt every quarter since 2021 and has beat earnings expectations ever since.
While the company does carry debt, Adam Aron has proved to be a master at raising cash from thin air.
Some of his efforts have included branded merchandise, the introduction of its equity APE, and through partnerships in the entertainment industry which Disney and Netflix.
The company is expected to launch a new credit card this year and put AMC branded popcorn in retail stores.
Market News: How hedge funds manipulate the stock market.
Hedge funds have been manipulating the stock market for decades.
But it wasn’t until now that a community has risen to raise awareness of market injustices.
The shorting of both AMC and GameStop stock have uncovered a number of nefarious strategies used against retail investors.
What is the SEC doing to regulate these financial entities?
We’re here to find out.
Welcome to Franknez.com – The blog that fights for retail investors. Today we’re discussing how hedge funds manipulate the stock market and what the SEC is doing about it.
Let’s get started!
Overleveraging Borrowed Shares
Hedge funds have an incredible supply of short shares available to borrow.
This advantage has allowed them to manipulate a stock’s share price by initiating short-ladder attacks.
While supply and demand are pushing a stock’s price up, hedge funds short the stock using an insane amount of leverage.
This predatorial strategy has yet to be announced as illegal nor has it been addressed by the SEC.
Off Exchange Trading
Hedge funds and market makers are getting away with being able to trade and swap stock in foreign exchanges where the stock’s price isn’t required to be disclosed.
They’re taking retail orders and, in a way, manipulating the circulating supply by not reporting accurate transactions.
We’ve seen this happen with Barclays.
Barclays CEO, Jes Staley – Hedge fund manipulation
Reports by Finra have been made public detailing multiple fines on Barclays for inaccurate books and records.
Barclays is one of Citadel’s clearing houses.
Off exchange trading where transactions aren’t displayed on the list market such as the NYSE is a massive problem the SEC is still trying to figure out.
AMC and GameStop have had an incredible amount of FTDs, or failure-to-delivers.
These are orders that have not been executed in options, and are usually a result of a ‘short party’ not owning or not having all of the underlying asset.
This has led retail investors to the educated assessment that synthetic shares are floating in the market; shares known as naked shares used to short a stock.
According to Investopedia, “Despite being made illegal after the 2008–09 financial crisis, naked shorting continues to happen because of loopholes in rules and discrepancies between paper and electronic trading systems.”
Naked shorting has gone mainstream with CNBC’s Melissa Lee and Fox Business’s Charles Payne bringing light to this predatorial practice in the market.
Retail investors must use their voice to address these issues to the SEC.
According to The Fool, you should invest in this or that “instead”.
We’ve seen the headlines countless times.
The Motley Fool is a source that provides its subscribers with hand-picked stocks with potential gains.
With tremendous respect, stick to what you do.
The integrity of this company is to help investors pick winning stocks, not to divert them from a stock due to its potential upside that can cause hedge fund partners to lose billions of dollars.
And that’s exactly what happened.
No matter how many times mainstream media outlets tried to divert retail investors from buying AMC stock, it cost hedge funds a lot of money all year.
And at the same time, a lot of retail investors have a lot of unrealized gains.
This ladies and gentlemen is how the media has tried to manipulate the performance of a stock.
This influence can sway a new retail investor from adding to the surging volume of shares being purchased in the market.
To the new retail investor – make your financial decisions based on your own due diligence.
Not on what media sources get paid to write about.
Yahoo Finance & InvestorPlace
Platforms such as Yahoo Finance & InvestorPlace have also had their fair share of negative headlines to try and divert the public from skyrocketing AMC to the moon.
With InvestorPlace even throwing a jab at GME investors saying, “If You’ve Made Money On GameStop, You’re Not An Investing Genius”.
Perhaps not, but I’m pretty certain these investors are wealthier than the person who came up with that punchline.
These media sources have been discouraging new retail investors from investing in AMC since the beginning of the year although the stock is up year-to-date!
Manipulation In the Stock Market
Robing Hood? Stock market manipulation
I’m sure you’ve all heard of the Robinhood scandal.
This is another form of manipulation in the stock market caused by the halt of buying power.
Robinhood prevented its users from buying stocks such as AMC and GME (GameStop) during GME’s bull run.
Although restrictions aren’t as tight anymore, we’re beginning to see trusted and beloved companies get exposed as hedge funds worst nightmares become a reality.
Today we’re seeing more people learn about how the stock market moves.
If more of the public is to understand how hedge funds pose a risk to our economy and businesses, we must expose these financial institutions for who they really are.
Franknez.com fights The Fool, Yahoo Finance, and InvestorPlace
Franknez.com is fighting for the community against malpractice from all news media shunning AMC, GameStop, and other retail favorites.
This platform will serve as a positive media outlet for the community and only spread factual documentation, and news related cited-sources.
I will not encourage retail investors to take a position in any stock.
However, I will outline the facts and evidence to help you make your own personal financial decision.
How can retail investors bring awareness to the community?
Retail investors can expose false information on social media to shine light on manipulation tactics driven by hedge fund partners.
Sharing factual and positive articles relating to the performance or analytics of a particular stock is another way the investing community can stay united.
Franknez.com is a platform for the community.
Market News Published Daily
For more stock market, business news and updates,join the newsletterto receive weekly market news and notifications straight to your inbox.
Franknez.com is the media blog that keeps retail investors informed.
