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Amazon Sparks Theatrical Release Competition
Amazon is now setting itself up as a direct competitor to major studios such as Paramount Pictures in its new multi-billion-dollar investment plan to release several films in theatres.
While most major studios have been around for a long time, Amazon is coming in hot with the news that has AMC shareholders in particular excited for the fundamental growth of the movie theater business.
Shares of AMC surged more than 6% amidst the announcement.
Volume picked up as well, exceeding its average volume of 26 million to more than 30 million.
The news is huge for the movie theatre industry who Wall Street has bet against for the past several years, but more specifically since the start of 2021.
Retail investors are now armed with massive confidence in the movie theatre industry.
This news has the potential to spark heavy buying in movie theatre stocks such as AMC again.
One thing is certain, movie theatres and shareholders aren’t leaving, sorry Charles Gasparino.
CNBC Says Amazon News is a ‘Positive Sign’ for Movie Theatre Industry
“While a $1 billion annual investment for film development is on the lower end of what major Hollywood studios spend each year, it’s a positive sign for the movie theater business, which has struggled in the wake of the pandemic.”
Is the narrative changing?
Is now time for short sellers to throw in the towel before large institutions go long and begin piling in?
Despite AMC Entertainment beating earnings expectations every quarter since 2021, short sellers on Wall Street have aimed at shorting the company out of existence.
But the retail community made up of millions of investors have been the strongest support for AMC Entertainment.
Shareholders are preparing for an AMC short squeeze as the stock continues to trend upwards and break new levels of resistance.
The movie theatre stock is up +18.40% on the month and up more than +37% in the past week.
Volume has steadily increased and even surpassed the average trading volume of 30 million.
AMC shareholders are speculating big moves may be underway as the rising price triggers short sellers to close out their positions.
AMC’s current short interest is still high at 19.76% per Fintel.
This means there is plenty of shorting in the stock for retail to trigger another massive price move like they did in January but more specifically in June of 2021 when the stock soared to $72 per share.
The company has performed well considering it almost faced bankruptcy early last year.
AMC Entertainment has beat quarterly earnings since 2021, striking confidence for an AMC short squeeze in 2022.
And the cost to borrow short shares has also skyrocketed in recent times.
Borrowers are now paying a whopping 66.4% to short the stock!
This is big news.
Let’s discuss it more below.
AMC Short Interest Today
According to Fintel, AMC’s short interest today is sitting at a high 19.76%.
AMC shot up to $72 per share last year when the stock was heavily shorted around 20% short interest.
AMC’s short interest came down to approximately 14% when it had reached its all-time high of $72.
The stock’s price may have come down a long way, but shorting has increased since and so has the short interest.
But AMC is seeing a slight bounce as it rejects the major level of support around $6 per share, currently trading between $7.50 and $8.
Heavy buying pressure is all the movie theatre stock needs to begin following previous trends back up to $9, $14, and $20+ levels.
If retail investors are able to successfully trigger this event, a short squeeze is inevitable.
What makes AMC more interesting now than ever is how high short sellers are paying to borrow the stock compared to earlier this year.
Stonk-O-Tracker is reporting a whopping 66.40% short borrow fee rate.
This is the annual fee it is now costing hedge funds to short the recovering movie theatre chain.
Liquidation across the markets could explain the obligation to keep up with such a high fee.
But that’s not all, AMC’s short borrow fee rate was as high as 77.80% on Wednesday.
The question is, how long will hedge funds be able to keep up with these losses as retail investors continue to buy and hold AMC stock?
FUD Grows but the Community Still Stands
There are many doom prophets infiltrating the retail community urging investors to sell their AMC shares.
Claiming that AMC is dead, and it will never squeeze.
Now more than ever, short sellers opposing heavy retail volume are trying to scare shareholders out of their money.
But the AMC community is still standing strong.
Is an AMC short squeeze happening soon?
The probability of retail investors squeezing shorts again is not a far-fetched idea.
We could begin to see bigger price action very soon.
Black Panther: Wakanda Forever scored the second biggest opening of the year behind Doctor Strange: Multiverse of Madness with a $300 million global launch and $180 million domestic debut.
It’s safe to say AMC Theatres is far from going bankrupt like Wall Street likes to predict.
But does this mean AMC stock is a buy?
AMC Reports $0.22 Loss Per Share ($227 Million)
AMC Entertainment reported a $0.22 loss per share, or $227 million during Q3 earnings.
The company’s shares have declined dramatically during the bear market though investors seem to be gaining confidence again as the S&P 500 begins to bring the entire markets up again.
Despite general market sentiment, AMC Entertainment has been releasing nothing but bullish news all year.
Some analysts have even gone to say that share prices are so low now from their high that now could be a great time for value investors to buy into the company stock.
And I agree.
Whether or not the markets have hit a bottom yet, AMC Entertainment continues to be a retail favorite with a strong CEO who’s willing to do whatever it takes to raise capital and move the company forward.
But I’m curious to know what you think.
How are you feeling about AMC Entertainment stock today?
Leave your thoughts in the comment section down below.
Two other anticipated films coming to AMC theatres in Q4 include Black Panter: Wakanda Forever and Avatar 2.
AMC’s Market Cap is Still Below Its Debt Load
AMC Entertainment’s current market cap is sitting at $2.88bn, the company has north of $5bn in debt.
The movie theatre chain company has done an incredible job at paying down its debt, although company shareholders and the public are what’s keeping AMC Entertainment afloat.
As long as there are moviegoers and investors feeding the company with liquidity, AMC Entertainment is far from gone like many short sellers would hope.
The public’s eye on the largest movie theatre chain company in the world has not faltered; for them, going to the movies is merely a means of reality going back to normal after the pandemic lockdowns.
And as we saw in Q3 earnings, AMC’s attendees have increased 33% from Q3 of last year, seating more than 53 million guests in Q3 alone.
Shareholders also play a massive role in the success of the century old movie theatre company.
The difference is shareholders are battling short and distort campaigns in a conflict of interest with mainstream media and Wall Street institutions who hope to profit from the possibility of bankruptcy.
And although AMC is no longer on the brink of going bankrupt, Wall Street seems to have a personal vendetta against retail investors who disrupted the flow of their short scheme.
Holding AMC Stock?
What are your current thoughts on AMC stock and in the direction the company is going?
Leave your thoughts in the comment section down below.
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