If you’ve been following the stock market news you’ve probably heard of all the hype surrounding AMC stock and GME (GameStop).
It wasn’t long before traders flocked over to AMC after the massive gains GameStop yielded due to the high percentage of shorting within the stocks.
Shorting a stock is the process by which sellers essentially bet on the stock price to drop. They borrow stocks at higher cost and sell the stock low, profiting the difference.
Well, investors over at r/wallstreetbets found that by purchasing stocks at low price in heavy volumes it would drive a short squeeze. A short squeeze occurs when a stock jumps sharply higher, forcing short sellers to buy higher, causing them to lose money. Lots of it.
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Will we see a squeeze with AMC?
There are numerous news that lead traders and investors alike to predict an upcoming short squeeze like we saw with GME (Gamestop).
- CEO of AMC announces AMC is no longer going bankrupt (via. Los Angeles Times)
- Vanguard, Wells Fargo, BMO Harris, BlackRock, Fidelity and many more institutions are buying AMC stock while it’s low (via. CNN Business)
- AMC is currently the most shorted stock (via. MarketWatch) Unfortunately MarketWatch has hidden AMC from their list. Retail investors suspect foul play.
- AMC is also currently one of the most held stocks surpassing Apple (AAPL) and Tesla (TSLA) (via. Nasdaq)
- More publicity and awareness has average people investing in AMC which is driving volume for a potential squeeze
Big institutions keep buying AMC stock
We’re seeing huge institutions are investing in AMC stock while it’s affordable. Because it’s affordable we’re also seeing average people invest in this stock.
As long as the stock is being held, though lows and through highs, a squeeze like we saw with GME (GameStop) is certainly possible.
AMC stock closed at $55.18 on June 16th. The stock has been green for quite some days now and is more bullish than ever. However, shorts continue to short ladder the stock causing some consolidation. AMC wants to keep climbing.
Short-laddering occurs when short investors buy back their shares at a low price, driving down (or leveling the stock) gains. These are the attacks we’ve been seeing whenever AMC begins to see gains, all year.
As long as AMC shareholders continue to hold and buy the dip, short investors are at a disadvantage.
Great news for AMC Entertainment
Other news that can further drive the share price of AMC stock is the announcement that most AMC theaters have now begun to open up.
BREAKING: AMC’s short borrow fee as of 6/16 is 1.68%, via. Fintel.
The fee is going up although it had recently come down.
What is a short borrow fee?
The short borrow fee is the interest shorts pay for borrowing shares of AMC stock.
This means shorts are losing money every day by not closing their positions. If we want to squeeze shorts from their positions we’ll need to see this short borrow fee gradually increase.
Why the short borrow fee rate matters
It costs shorts interest to hold while it costs the retail investor absolutely nothing to hold.
Shorts are losing money every day they hold because of this interest fee for borrowing the stock.
For some reason shorts still think AMC Entertainment can go bankrupt, although they have enough money to continue doing business.. I know, I don’t understand this either.
As hedge funds like Melvin Capital lose money, the short borrow fee will go up to make up for some loses. As the interest goes up, shorts will naturally cover. If they don’t, they will continue to pay interest for borrowing.
How high can AMC stock go up to?
Because we’ve seen a lot of suppression in the market due to short-ladder attacks, many traders are anticipating AMC stock can get as high if not higher than GME (GameStop).
This is actually quite logical given that we’re seeing more and more people and institutions alike purchase AMC stock and hold their positions.
There’s a notion that all these suppressed gains will result in a massive short squeeze during the Summer. Again, this is all speculation but all signs are pointing towards big gains.
So, is it too late to purchase AMC stock?
Not at all. In fact, if you’re looking to get into the AMC train now is the perfect time to do so.
The price after a short squeeze eventually fall back down and level out, but this will take time. With AMC stock treading below $100, now could be the perfect time to buy. Just don’t wait too long because we hear it’s going to the moon.
AMC’s short borrow fee keeps going up, hedge funds continue to short it, volume is increasing; it’s the perfect storm for a short squeeze.
Things to expect in the market with AMC
- Volatility followed with an upward trend in price action
- Short-ladder attacks
- Headlines advising you to trade in something else
- Hedge funds to lose a lot of money
- More retail investors buying this stock right now
- A series of gamma squeezes
- And, a highly potential short squeeze that can happen at any time
How many AMC shares should I buy?
If you’re planning on taking a position in AMC Entertainment set a budget for investing. Since the market is volatile at the moment, purchase shares incrementally.
The best time to buy a stock is when the share price has dipped. This will allow your investment to see gains when the stock price rises again.
Ladies and gentlemen, the last thing you want to do is to invest more than you can handle to lose. This advisory must be made.
If you’re holding AMC stock leave a comment below and let me know what a short squeeze would mean for you. Retail investors can feel it, the tendies are coming.
Where can I invest in AMC? What’s a good platform?
If you have not opened a brokerage account to begin investing, read how to invest in the stock market (step by step). In this post you will see a number of linked platforms that you can check out!
I personally use Vanguard. Vanguard has proven to be useful and it has never failed me before. Here, I hold long-terms stocks as well as a position in AMC.
It is important to note that I am not a licensed financial advisor. Like many traders and self taught investors, all speculation is based on educated estimations based on highly reliable analysis, patterns, and documented news charts.
On another note: It would be wise to not invest more than you can afford to lose. In other words, invest money you would be okay with losing for simpler terms.
More info on AMC from Trey’s Trades (Analyst)
Trey is an analyst in the stock marketing and trading world. His videos are super fun to watch as they are very informative and downright transparent. Furthermore, Trey’s personality just makes the videos all that much better.
Be sure to follow Trey as he engages his audience live when the market opens for real-life discussions.
It’s important to keep yourself updated with the latest AMC news so you can invest with confidence.
This is not Trey’s Trades most recent video but it’s a very important one. Be sure to keep up with AMC analytics so that you’re aware of the play.
Another great Analyst covering AMC right now is Roensch Capital. They’re a little more analytical, but a trustworthy source nonetheless.
Other YouTubers covering AMC in depth include Matt Kohrs, Max Maher, and Andrew Mo Money.
What’s cool about these YouTubers is that they all go on each others channels from time to time and do collaborations regarding DD. Trey and Roensch Capital are by far my favorite channels covering AMC.
I personally started following Trey’s Trades when he had about 10,000 subscribers. He’s nearing 300,000 now, and well deserved by the way.
But, if you want daily technical analysis on AMC, Roensch Capital is the channel for you.
Ignore the bogus headlines from The Motley Fool and other sources
AMC and r/wallstreetbets have been given lots of negative press from the likes of The Motley Fool and other sources; shaming the purchase of the stock.
Fortunately we’ve been backed up by the real Wolf of Wall Street as well as Mark Cuban, Chance The Rapper, and other big names.
Influential outlets with powerful hedge fund partners (institutions who short the stock) have been attacking traders and investors by providing false information wherever they can.
What we’re seeing right now is that the big guys are losing money due to the price of shorted stocks going up. They will say and do whatever they can to divert the public from trading this stock.
My personal suggestion to you is to not let these sources intimidate you. Do your research to see how the stock price has been manipulated through bogus headlines and short-ladder attacks.
Not to mention, the complete halt of trading AMC stock by Robinhood. That’ll be another post for you.
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