AMC short interest has now begun to increase again after it had significantly dropped following the company’s approved proposals.
Shares of the movie theatre company have now fallen to a 52-week low despite bullish investor sentiment.
On Tuesday, AMC short interest was reported at 11.52% — however, short interest increased to 16.74% on Wednesday, indicating new short positions.
Short squeeze score also rose from 70 to 73 on Wednesday.
According to Ortex, ‘Short Score’ uses a multi-factor model that incorporates multiple short-related metrics, with a higher score indicating that the stock is heavily-shorted and has other characteristics that increase the possibility of a short squeeze occurring.
AMC’s short score had peaked at 95 back in July prior to AMC’s dilutive proposals.
Will AMC Entertainment have a chance at squeezing again?
Well, that will depend on whether investors are able to conjure up massive buying momentum like they did during the ‘meme stock’ frenzy of 2021.
The short interest is coming back up now, which indicates short sellers are certainly there.
Squeezing them out would require price action to move up, but this would require loads of buying pressure.
Investors are questioning how AMC’s short interest dropped so low without seeing any major price action like in 2021 when shares spiked to all-time highs.
Now many, though not all, are looking at AMC CEO Adam Aron for answers, urging the CEO to look into the possibility of foul play in the market.
Here are the latest developments happening with AMC Entertainment.
Also Read: More Than 50% of AMC Stock is Now Trading Off Exchange This Month
AMC Will Now Raise Cash To Pay Down Debt
AMC Entertainment announced last week that it has entered a new agreement with Citigroup, Barclays, B Riley Securities, and Goldman Sachs to periodically sell shares.
“The Company intends to use the net proceeds, if any, from the sale of the Common Stock pursuant to the Equity Distribution Agreement to bolster liquidity, to repay, refinance, redeem or repurchase its existing indebtedness (including expenses, accrued interest and premium, if any) and for general corporate purposes.”
AMC will now sell up to 40,000,000 shares to raise money according to the latest SEC filing.
“Each Sales Agent will receive compensation of up to 2.5% of the gross sales price of the Common Stock sold through it as a Sales Agent under the Equity Distribution Agreement, and the Company has agreed to reimburse the Sales Agents for certain specified expenses.
The Company has also agreed to provide the Sales Agents with customary indemnification and contribution rights.
The Company is not obligated to sell any Common Stock under the Equity Distribution Agreement and may at any time suspend solicitation and offers under the Equity Distribution Agreement.
The Equity Distribution Agreement may be terminated by the Company at any time by giving written notice to the Sales Agents for any reason or by each Sales Agent at any time, with respect to such Sales Agent only, by giving written notice to the Company for any reason,” says the filing.
“The Company intends to use the net proceeds, if any, from the sale of the Common Stock pursuant to the Equity Distribution Agreement to bolster liquidity, to repay, refinance, redeem or repurchase its existing indebtedness (including expenses, accrued interest and premium, if any) and for general corporate purposes.”
Also Read: Here Is The Latest AMC Stock Price Prediction From Analysts
Is AMC Entertainment Recovering?
The SEC filing comes after AMC announced the upcoming film centered around Taylor Swift’s concert tour, Taylor Swift | The Eras Tour, which earned $26 million dollars in advance ticket sales less than three hours after tickets first went on sale.
“AMC is still recovering from the Covid-19 pandemic which temporarily shuttered most theaters across the country and shifts in the industry with more films going directly to streaming.
However, the movie industry recently saw the fourth largest box office weekend in U.S. history with the blockbuster releases of Barbie and Oppenheimer“, says Forbes.
AMC has not announced a timeline for when this offering could begin.
However, the company said it plans to use the proceeds of the stock sale to pay down its debt.
In recent news, Wedbush upgraded AMC Entertainment from ‘underperform’ to ‘neutral’ with analysts currently looking at a 17.98% upside, Nasdaq reports.
Investor sentiment at the moment remains quite strong, even if shares of the company have fallen.
Fundamentals have now become more important than ever to shareholders, as it seems to be the key to eliminating the Wall Street short thesis.
But I’m curious to know your thoughts – is AMC Entertainment still the play of the decade?
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