Market News Daily – Will APE Now Trigger an AMC Short Squeeze Soon?
Will APE now trigger an AMC short squeeze soon? The Street says an AMC short squeeze is now more likely to occur due to rising retail demand.
On Wednesday, AMC’s volume skyrocketed to 197 million while APE’s volume followed suit, surging past 134 million.
AMC stock fell more than -23% while APE stock fell nearly -8% intraday despite this massive spike in trading volume.
Another reason the former Jim Cramer-owned media site says an AMC short squeeze is likely is due to the incredibly high cost to borrow.
AMC’s max cost to borrow has reached upwards of 1,006%, per Ortex data.
Similarly, S3 Partners, a financial analytics firm has also reiterated this same thesis.
“Although the threat of significant share dilution is obviously bearish, the upshot on AMC’s share price is still hard to guess.
With borrowing fees closing in on 1000%, any upward trend in AMC’s price could spell disaster for bears.
Given the tremendous short pressure on AMC and the tremendous attention the stock is receiving from retail traders, high volatility and high trading volume are to be expected.
Placing a short bet on AMC may seem perfectly logical given the upcoming APE conversion, but shorts have been burned many times betting against this retail favorite, reports The Street.
Will AMC squeeze after the APE conversion? I’d love to hear your thesis.
Recently two institutions have purchased shares of AMC stock prior to its approved conversion.
Hedge fund CEO Bruce Richards also says he’s ‘super bullish’ on AMC’s new APE conversion.
In the end, whether or not investors manage to trigger a short squeeze, AMC Entertainment will benefit from raising billions in cash.
According to CEO Adam Aron, the only way to eliminate the Wall Street short thesis is by improving the company’s fundamentals.
AMC Speaks on Short Sellers Covering Prior to New Conversion
Market News Daily – Will APE Now Trigger an AMC Short Squeeze Soon?
Last week, AMC Entertainment published a statement to shareholders relating to short sellers closing prior to the new APE conversion.
Will short sellers be required to cover their positions before the Reverse Stock Split and Conversion?
According to AMC’s new 8-K filing, AMC expects that the deliveries under stock borrowing arrangements will be adjusted in the regular way to account for the Reverse Stock Split or, in the case of contracts on APEs, the Conversion.
However, AMC states that it “does not determine and is unable to provide interpretive advice on the impact of these events on the contractual terms governing stock borrowing arrangements.”
“AMC does not determine and is unable to provide interpretive advice on the impact of the Litigation Settlement Payment on the contractual terms governing stock borrowing arrangements.”
AMC’s reverse stock split will go into effect on Thursday, August 24.
The conversion of APE shares into AMC common stock will occur the following day, Friday August 25.
The litigation settlement will then take place on Monday, August 28.
Will there be large failure-to-deliver (“FTDs”) like when the APE was distributed?
AMC Entertainment states that while they cannot predict the trading impact of these corporate events, given the significant transactions that will occur over successive trading days, it is possible there will be large FTDs like when the APE was distributed.
What do you think will occur upon converting? Leave your thoughts below.
AMC Shareholders Have Now Saved The Movie Theatre Company Again
Market News Daily – AMC Cost to Borrow Skyrockets to 1000%.
AMC shareholders have now saved the movie theatre company again after two major proposals were finally passed following an exhausting lawsuit.
A reverse stock split and conversion of APE shares to common stock will now go into effect later this August.
AMC’s 1-for-10 reverse stock split will go into effect on Thursday, August 24.
The conversion of APE shares into AMC common stock will occur the following day, Friday August 25.
The litigation settlement will then take place on Monday, August 28.
CEO Adam Aron says these dilutive proposals will help AMC Entertainment raise plenty of cash to survive another catastrophic event.
“AMC must be in a position to raise equity capital. I repeat, to protect AMC’s shareholder value over the long term, we MUST be able to raise equity capital.
That is especially the case now with the added uncertainty caused by the writers and actors strikes, which could delay the release of movies currently scheduled for 2024 and 2025.
If we are unable to raise equity capital, the risk materially increases of AMC conceivably running out of cash in 2024 or 2025, or of AMC being unable to satisfactorily refinance and stretch out the maturity of some of our debt (which is required of us beginning as early as 2024.)
The risk of financial collapse is not whimsical. Cineworld/Regal, the second largest movie theatre chain in the world, fell into bankruptcy and their equity holders were essentially wiped out. Bed, Bath and Beyond which was viewed as the third most watched meme stock, also fell into bankruptcy and their equity holders also were essentially wiped out.
Fortunately, at AMC, we have been much smarter, much more agile and much more skillful. We have risen to every Covid challenge heretofore, and I have every confidence in our continued ability to successfully navigate through these complicated times,” Adam Aron said in a July letter.
AMC Entertainment continues to be a strong target by Wall Street, but why?
Movie theatres are no longer dead, and AMC Entertainment is no longer on the brink of going bankrupt.
Giants Amazon and Apple are now investing billions of dollars in the movie theatre industry, which is going to bring more movie titles to cinemas across the country including industry leader AMC Entertainment.
In this article, we’re going to go over some of the latest developments in AMC, it’s history since redditors took over, and an AMC short squeeze update for the year of 2023.
AMC keeps on keeping on, and although AMC has been on discount recently, retail investors continue to buy and hold it.
Retail investors remain excited about the data that has been collected for years now.
Will we see an AMC short squeeze while we continue to ride today’s bear market?
And if so, how soon?
Welcome to Franknez.com – the blog providing you with content on stocks, crypto, and market news. Today we’re discussing AMC Entertainment stock and its short squeeze update and history.
Lets get started!
How soon will we see an AMC short squeeze?
Retail investors all want to know.
Is it this week?
Will it be next week?
Or, are we looking at a longer game here?
Here’s what we know.
Key Highlights
AMC closed at $3.68 on August 15th. The stock continues to be heavily shorted. AMC Entertainment is set up for a short squeeze despite its split.
Shareholders continue to buy and hold the stock.
AMC’s short interest data shows us the stock has the perfect setup for a short squeeze.
Below is a series of documented facts and positive news that all influence AMC’s potential towards a short squeeze.
“Since reopening our first theatres with AMC Safe & Clean in August, AMC has welcomed back nearly 10 million moviegoers nationwide without a single reported case of COVID-19 transmission among moviegoers at our theatres. We look forward to welcoming back our New York City guests to the big seats, big sounds and big screens that are only possible at a movie theatre.”
Adam aron, President and CEO of AMC Entertainment
For those who thought AMC was a dead company, think again.
The company is now generating big revenue since it’s reopening and has beat every quarter since 2021.
Today, AMC shareholders have saved the movie theatre company again after two major proposals were finally passed following an exhausting lawsuit.
A reverse stock split and conversion of APE shares to common stock will now go into effect later this August.
AMC’s 1-for-10 reverse stock split will go into effect on Thursday, August 24.
The conversion of APE shares into AMC common stock will occur the following day, Friday August 25.
The litigation settlement will then take place on Monday, August 28.
CEO Adam Aron says these dilutive proposals will help AMC Entertainment raise plenty of cash to survive another catastrophic event.
Similarly, Anchorage Capital also closed its doors after betting against AMC stock.
Here’s why this matters:
Hedge funds who try to go against the retail wave will get burned
This is a huge win for retail investors over ‘smart money’ Wall Street
Unless shorts close their positions, hedge funds may suffer big consequences again
Today’s borrow fee rates are higher than they were in 2021 when AMC surged to $72 per share
An AMC short squeeze might be closer than we think
There are a few things retail investors did in 2021 to trigger massive price action:
They held their positions during the ups and downs
Shareholders purchased the dips
Investors shared information relating to a short squeeze (such as this article, 2021) to raise awareness
Kept tabs on charts to know when to buy (during drawdowns)
The incredible thing is 93% of market participants said they will still hold AMC stock in 2023 for a short squeeze.
Will Shorts Cover in 2023?
AMC Entertainment answered questions on short sellers covering prior to its newly approved conversion proposal.
Shares of the company fell more than -30% after hours on Friday as APE shares rose +30%.
On Monday, AMC stock is down more than -33% while APE is up nearly +18%.
Will short sellers be required to cover their positions before the Reverse Stock Split and Conversion?
According to AMC’s new 8-K filing, AMC expects that the deliveries under stock borrowing arrangements will be adjusted in the regular way to account for the Reverse Stock Split or, in the case of contracts on APEs, the Conversion.
However, AMC states that it “does not determine and is unable to provide interpretive advice on the impact of these events on the contractual terms governing stock borrowing arrangements.”
How will short sellers be affected by the Litigation Settlement Payment?
“AMC does not determine and is unable to provide interpretive advice on the impact of the Litigation Settlement Payment on the contractual terms governing stock borrowing arrangements.”
AMC’s reverse stock split will go into effect on Thursday, August 24.
The conversion of APE shares into AMC common stock will occur the following day, Friday August 25.
The litigation settlement will then take place on Monday, August 28.
Will there be large failure-to-deliver (“FTDs”) like when the APE was distributed?
AMC Entertainment states that while they cannot predict the trading impact of these corporate events, given the significant transactions that will occur over successive trading days, it is possible there will be large FTDs like when the APE was distributed.
Looking Back at the Events Prior to AMC’s Short Squeeze in 2021
Adam Aron gives positive news on AMC Entertainment – Archive 2021
AMC Entertainment has raised more than 2.2 billion dollars in cash
90% of AMC theaters in the United States are now open with New York and Los Angeles finally reopening
Vaccinations and policies are making movie theaters safe
New movie titles are guaranteed to increase sales revenues
CEO and President Adam Aron expresses an optimistic future for AMC Entertainment
AMC Entertainment has implemented a Safe & Clean program under the advisement from Harvard University’s prestigious School of Public health as well as well as the No. 1 U.S. cleaning brand, The Clorox Company. This means movie goers can now return at ease knowing a proper sanitation program has been put in place.
Hedge fund affiliate partners such as MarketWatch, The Fool, and other finance website tried to redirect the public from investing in AMC stock while the company was finally reporting positive news.
That’s primarily because hedge funds were losing so much money daily as share prices continued to rise.
A short squeeze became the ultimate threat to hedge funds with massive bets towards the downside.
Today, AMC Entertainment is in a whole other world compared to where it started in 2021.
Is AMC Shorted?
AMC’s current short interest is around 27.76%, which is much higher than it was when AMC shares skyrocketed to $72.
As of 8/15, we’re seeing 200,000 shares have been made available to borrow, via Stonk-O-Tracker.
While shorts might have the capability to short AMC stock, this is only temporary.
The retail community has made big enough ruckus to where regulators are finally investigating naked shorting, or at least acknowledging the problem.
What does this mean for the AMC shareholder?
Short sellers have used this rinse and repeat process for years now.
The important thing in 2023 is that AMC is able to continue raising cash to eliminate the short thesis.
Not only has bankruptcy been off the table since 2021 (via. Los Angeles Times), but AMC movie theater attendees have increased drastically in 2023.
This in turn has increased revenue and helped AMC Entertainment pay off more debt in the past two years.
AMC Entertainment Quarter Earnings History (2021)
Below are AMC’s quarter earnings for 2021, the year the ape movement began.
AMC announced their Q1 earnings for 2021 on Thursday, May 6th.
Things have been looking particularly bullish and optimistic since that point.
The only thing getting in the way has been market makers who have big advantages over the average retail investor.
If you missed the conference call years back, you can view it here for your viewing pleasure.
It’s really hard to tell when an AMC short squeeze may occur.
Experts, analysts, and shareholders can’t identify an exact date and time because of how random the probability may be, as seen in 2021.
However, the possibility of an AMC short squeeze is certainly possible given that it is still a very heavily shorted stock.
We also now have more data then ever before that indicate a massive short squeeze is almost certain to happen.
Especially now that the SEC has announced some crackdown on shorting.
With Melvin Capital and other hedge funds out of the picture, it’s only a matter of time before others close their positions.
That is if retail investors can build enough buying pressure in 2023 like they did in 2021 to drive share prices up.
In the end, it truly is all up to retail investors!
Will investors be able to create another AMC short squeeze in 2023?
That might be a little harder now with all of the company’s dilutive proposals going into effect soon, but it doesn’t mean it’s still not possible.
Trey’s Trades AMC prediction
With that being said, Trey’s Trades predicted a short squeeze in 2021. Trey was a leader in the AMC community back in the day, though he’s recently taken time off from stock content on YouTube.
Data points towards AMC stock reaching $1000+ per share according to his research.
See what Trey had to say.
AMC short squeeze – AMC Stock Forecast – AMC Stocktwits | Trey’s Trades on AMC Short Squeeze.
The real question is, how can retail investors make this AMC short squeeze happen?
We know that short-sellers eventually have to close their positions. This means that they will eventually have to buy AMC stock at the current share price.
If retail investors continue to drive the share price up by buying the dip and holding their positions, short-sellers will have no other option than to buy from the retail investor at a higher share price.
2. Retail investors will also need to buy the climbs in order to show a demand for the stock. This doesn’t have to be huge buys, rather incremental to validate the current share price.
This play essentially creates a supply and demand scenario between retail investors and short-sellers.
However, demand must exceed supply by a monstrosity amount, as we saw in June of 2021.
The results? A short squeeze.
Just make sure to take your profits this time.
The last thing you want is to see your gains turn into losses.
Hedge funds are doing everything they can to prevent a short squeeze
How are they doing this?
By promoting false information through MSM (we’re certain you’ve seen it)
Through strategies such as short-ladder attacks in the market
Dark pool/off exchange trading
HFT and Spoofing
And, by restricting certain brokerage accounts from allowing its retail investors to purchase or buy shorted stocks as seen with Robinhood (Robing hood)
This is what retail investors can do to fight corruption:
Share content that presents facts, like this article and others to raise awareness (blog posts, analysis videos, etc.)
Continue to educate yourself and make investment decisions based on your personal analysis
What is interesting however is that Goldman Sachs has now given AMC Entertainment a price target of $175 per share in 2023.
MarketBeat reports that on July 24, 2023, Goldman Sachs gave AMC Entertainment a ‘Boost Target’ action and ‘Buy’ rating with a whopping price target of $175.
And CoinCodex is predicting AMC Entertainment stock to soar more than +9,000% by the year 2030.
“Based on the average yearly growth of the AMC Entertainment Holdings stock in the last 10 years, the AMC Entertainment Holdings stock forecast for the beginning of next year is $ 8.19.
Using the same basis, here is the AMC Entertainment Holdings stock prediction for each year up until 2030.”
The long-term AMC Entertainment Holdings stock price predictions are as follows:
By year 2024, AMC Entertainment is predicted to soar +90.66% from today’s current share price to $8.19.
In 2028, AMC stock is predicted to trade around $108.21 per share, a gain of +2,419% from today.
And by 2030, CoinCodex predicts AMC will trade near $400 per share, up more than +9,000% from today’s trading price.
In 2023, investors will need to identify the primary reasons to invest in AMC Entertainment stock today.
Redditors have touched base on this topic and are determined anything below $100 is a buy, for a short squeeze that is.
However, with so much dilution happening in 2023, you might want to consider writing and coming up with your own best-case and worst-case scenario plan.
The approved proposals is a massive win for the movie theatre company whether you strongly agree with them or strongly do not.
Identifying why you’re still invested in this company or why you would like to is something that will vary from individual to individual.
“The steps we will be taking now are shareholder approved and mean the following to AMC:
AMC will be more resilient: Were it not for our ability to have raised equity over the past three years, AMC simply would not have survived the pandemic-induced decline in our business. Looking forward, the flexibility to raise equity capital at the appropriate times is an absolutely vital tool for any large company, and AMC is no exception.
We eliminate capital raising inefficiencies of APE units trading at a significant discount to AMC shares: Converting APE units to AMC shares results in a single price for all AMC equity. This single price eliminates the unnecessarily high dilution caused by the lower market price of APE units. For the past full year, for example, to raise cash, AMC could only sell APE units, and they only could be sold at a great discount to AMC shares. With single equity capital structure, I believe AMC will be able to raise equity capital more efficiently and on better terms in the future.
“Some of you fear dilution is a mistake no matter what. You are wrong.
To the contrary, sometimes raising money is an absolute imperative.
Over the past twelve months, for example, AMC raised $418 million of cash through the sale of APE units.
As of the most recent June 30 quarter end, AMC had $435 million of cash on hand.
Can you imagine how dire our circumstances would have been if we hadn’t had the foresight to raise that cash?
Companies that run out of money face financial ruin.
Just ask Cineworld/Regal shareholders, or ask Bed, Bath and Beyond shareholders.
But at AMC at the moment, we have a positive market cap, and we are so much stronger because we raised money along the way,” said Adam Aron on Monday.
Where was AMC trading at before the pandemic?
AMC was actually trading between $30-$35 back in the booming party economy of 16′!
AMC stock started to decline as their debt increased and hedge funds began to heavily short it.
However, AMC Entertainment Holdings, Inc. is in a completely different world today than it was during the pandemic with box office number reaching pre pandemic levels.
AMC Announced a new record high earnings report last Tuesday.
Analysts have been expecting big earnings results from the movie theatre chain due to the rise of this year’s second quarter box office numbers.
“While we still have much work ahead of us on this front, AMC’s glide path to eventual recovery continued with significant pace in the second quarter of 2023 as our results set new records and represent AMC’s strongest second quarter in four full years.
Following an impressive start to the year in the first quarter of 2023, the second quarter yet again showed great progress.
AMC saw more than a 12% growth in attendance, a 15% growth in total revenue and a 71% increase in Adjusted EBITDA compared to the second quarter of 2022.
Indeed, Adjusted EBITDA was $182.5 million, the highest such quarterly figure since the fourth quarter of 2019,” said AMC CEO Adam Aron.
Barbenheimer Produces Big Results in 2023
Towards the end of July, AMC Entertainment broke a 4-year weekend high record as “Barbenheimer” produced results bigger than expected.
The results demonstrate AMC’s path to recovery is also strong in Q3 of 2023.
“Barbie” ended up with $162 million in its first weekend of release, above Sunday’s already record-breaking estimate of $155 million. The Warner Bros. film, starring Margot Robbie declined just 9% from Saturday to bring in $43.7 million on Sunday.
Those ticket sales rank as the biggest opening weekend of the year, besting “The Super Mario Bros. Movie” ($146 million).
“Barbie” also marks the biggest debut ever for a film directed by a woman, overtaking Anna Boden and Ryan Fleck’s 2019 blockbuster “Captain Marvel” ($153 million), says Variety.
“Oppenheimer,” also beat expectations with $82.4 million, slightly higher than Sunday’s huge $80.5 million projection.
At the international box office, Oppenheimer added $98 million for a global tally of $180 million.
“The box office powered to its fourth-biggest weekend in history with over $300 million industrywide, said Variety.
What If a Short Squeeze Doesn’t Happen?
If an AMC short squeeze doesn’t occur, AMC stock price should still go up during the longer term process allowing shareholders to make at least some sort of profit.
That is, as long as the company continues to improve going into 2024 and the rest of the decade.
With AMC theaters now open since 2021, it’s inevitable that the company will begin to see bigger sales revenue every time a new title is released.
Keep in mind that AMC’s share price during the booming party economy of 16′ was roughly around $30 per share.
If a short squeeze doesn’t happen, fundamentals will continue to bring the stock up as more investors are buying the stock.
It’s also important to keep in mind that majority of the float is also held by retail investors, so the company has a huge support.
AMC hasn’t squeezed yet primarily to two main reasons.
The stock requires volume to drive the stock price action up
Shorts need to close their positions
Volume will surge as more and more retail investors (as well as institutions) get in on AMC stock.
Regarding shorts closing, retail investors need to squeeze them out of their positions by holding their positions and helping increase AMC’s short borrow fee.
You can keep tabs on AMC’s short borrow fee as it changes every day via. Ortex, or Fintel.
As of 8/15 AMC’s short borrow fee rate is a whopping 921.1%.
Interactive Brokers Chief Strategist Steve Sosnick says there’s big demand to short AMC Entertainment (NYSE:AMC) stock.
He says the biggest reason aside from the company’s fundamentals is its new merge with its equity (NYSE:APE).
“It’s very hard to keep the momentum in these things because economic reality does take hold.
Bed Bath & Beyond, at one point was the best performing stock on the board until reality set in and they began defaulting, averted bankruptcy, but using a deal that is so dilutive that it’s unavoidable.”
Sosnick says AMC is in a very special situation because of the proposal to merge APE with AMC common shares.
“Right now we’re seeing such a demand to short AMC partly because of its difficulties but partly because of the special situation.
This really is what they were looking for in some ways as the mother of all short squeezes.
The borrow rate, it costs you 700% to borrow the shares overnight — if you can find them,” said the Interactive Brokers Chief Strategist on Yahoo Finance.
Is AMC Entertainment stock about to squeeze this year?
“Redditors, thank you so much for helping create the best pipeline we’ve ever had”, said Ken Griffin on Business Insider.
Ken Griffin, on how the GameStop frenzy helped raise Citadel’s profile with potential hires.
Business Insider says the SEC found no truth to any of the conspiracy theories but how can the SEC really go against one of the most powerful hedge funds in the world?
Transcripts showed Citadel and Robinhood did in fact have “blunt negotiations” the night prior to the halts.
A Miami district court judge admitted the Citadel and Robinhood transcripts were suspicious.
However, the federal court has dismissed the case due to a ‘lack of evidence’.
Let us know in the comments section below what an AMC short squeeze would mean for you!
If you’re an AMC shareholder let us know in the comment section below.
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The last time AMC made the list, it stayed on it for an entire month.
This is the third time the security has been listed on the threshold list this year.
In April, The SEC (Securities and Exchange Commission) violated the 13-day threshold rule, which states that a broker-dealer with fail-to-deliver positions for 13 consecutive settlement days must immediately close out the ‘FTD’ position by purchasing shares in the open market.
AMC should have seen big buying pressure but instead plunged after it was removed from the threshold list.
CEO Adam Aron announced that the company has contacted both FINRA and the NYSE to look closely at the trading of their stock.
“Many of you, and we, are aware that AMC Entertainment has been on ‘The Threshold List‘ for 3+ weeks, indicating a number of FTDs.
Some of you may be pleased to learn that we have contacted both FINRA and the NYSE asking that they both look closely at the trading of our stock.”
But investors never received an update after the announcement and the stock is back on the threshold list, alerting investors of high FTDs and continued naked shorting in AMC stock.
Market News Daily – AMC Is Now Back on The Threshold Securities List.
FTDs, or Failure-to-deliver occurs when one party in a trading contract (whether it’s shares, futures, or options) fails to deliver on their obligations.
These failures derive due to buyers not having enough money to take delivery and pay for the transaction at settlement.
In the case of sellers, it means not having the goods to meet that transaction.
Failure-to-delivers can occur in options trading or when selling short naked, per Investopedia.
Nasdaq Has Reported Unusual Put Option Activity in AMC Stock
Back in April, Nasdaq reported very unusual AMC Entertainment put option activity.
According to the report first picked up by Fintel, a rather strange $781.04K block of Put contracts in AMC Entertainment was bought with a strike price of $11.00/share, expiring on April 21, 2023.
Fintel tracks all large options trades, and the premium spent on this trade was 5.07 sigmas above the mean, placing it in the 100.00 percentile of all recent large trades made in AMC options.
Today we’re seeing big sell walls around $4-$5 per share.
But retail investors have noticed AMC Entertainment stock has experienced unusual put option activity ever since the ‘meme stock’ frenzy in 2021.
The derivatives market has been a back door for institutions to flood AMC stock with put option contracts, in one form suppressing the stock from rising or simply having a greater advantage than average investors.
Still, the unusual put option activity in AMC Entertainment stock shows just how aggressive institutions are fighting to keep shares from rising.
AMC stock is currently up +3% this year-to-date but down more than -71% in the past year.
Analyst Names AMC Amongst Most “Squeezable” Stocks
S3 analyst says AMC Entertainment and GameStop (NYSE:GME) stock have the highest squeeze potential in the market.
“As the broader stock market has been on a tear for about a month, things are looking grim for investors with big short positions in stocks like AMC Entertainment Holdings Inc. and GameStop.”
But retail investors point out that the constant manipulation in these stocks is keeping shares from rising exponentially.
And they’re right — naked shorting, dark pool trading, off exchange trading, spoofing, and short and distort have all played a role in suppressing AMC and GameStop shares.
We’re now seeing AMC back on the NYSE Threshold Securities List for a big reason.
Yahoo Finance says the reason why stock tickers make it on the NYSE Threshold Securities List is due to market manipulation through naked shorting.
Mainstream media and Wall Street personalities have managed to brush aside this very big issue in the market but it’s no longer a secret that counterfeit shares are used to provide ‘liquidity’ in the market.
The incredible thing is that ‘meme stocks’ aren’t the only stocks in the market experiencing naked shorting or price manipulation from short sellers.
This is a very big problem; how long will the SEC and other regulatory bodies continue to ignore it?
Market News Daily – AMC Lawsuit to Be Resolved in Late June.
The AMC Entertainment (NYSE:AMC) lawsuit is scheduled to be resolved sometime in late June.
A Delaware court is targeting June 29-30 for a hearing to consider the proposed settlement between AMC and plaintiffs regarding the conversion of APE equity into class A common shares, share issuance, and a 1-for-10 reverse stock split.
The approved proposals will allow AMC Entertainment to raise capital to pay down its debt and use cash towards other business ventures and ideas.
“Some misunderstand the 1-for-10 reverse stock split, approved by 87% of March 14 votes, saying we are “stealing 90%” of your shares. You forget that the share price rises 10-fold at that time. EXACTLY the same as trading ten $1 bills for one $10 bill. Either way, you have $10.”
Investors are questioning why go through a reverse stock split in the first place if ‘nothing’ truly changes.
“In your comments, some fear that after a RS, short pressure could cause price to go back down. But you neglect that it is EVERY bit as easy to short a stock priced at $3.00 as it is on a stock priced at $30. A RS itself has NOTHING to do with any subsequent prices afterwards,” said the CEO on Twitter.
But there are more details shareholders should know about the proposals.
One of the biggest being how much more challenging it’s going to be to break even or become profitable at such a high share price due to the RS.
And the biggest risk of course is if share prices fall back down to current levels through heavily manipulation of the stock as we’ve seen for the past two years.
Latest AMC Lawsuit Update
Vice Chancellor Morgan Zurn was set to consider the proposed settlement in early April that would allow AMC to move forward with its conversion plan.
However, it seems this case might be bigger than we thought.
“I think it’s going to be almost impossible to do this in less than 60 days, given the stockholder interest that we anticipate,” Zurn said.
The judge was open to “getting this wrapped up by the end of June,” tentatively suggesting June 29 or June 30 for a settlement hearing.
AMC stock closed up nearly 4% on Tuesday to $5.15 while APE shares fell more than -6.5% to $1.42.
This is a developing story – join the newsletter below for the latest AMC stock news and updates.
AMC’s cost to borrow shot up to 1,000% during the start of the second quarter this year.
“High stock borrow fees can test the conviction level of short sellers as financing costs can take a large bite out of expected Alpha,” S3 analyst Ihor Dusaniwsky said.
Short sellers rely on brokers to have stock shares available to borrow.
If the broker has very few shares of a stock available, then that stock is placed on the hard-to-borrow list, a list AMC Entertainment is currently on.
Stocks on the hard-to-borrow list may not be short-sellable or have higher stock loan fees, hence why we’re seeing AMC’s cost to borrow rise significantly.
S3 Partners estimates AMC short sellers paid a total of $1.91 billion in stock borrow fees in the first quarter of 2023, up from $1.54 billion in the fourth quarter of 2022.
To make matters worse, AMC Entertainment is up nearly 30% this year-to-date which means 2023 has not been a good year for AMC short sellers.
AMC’s Short Borrow Fee Today
Sources such as Ortex and Stonk-O-Tracker are reporting AMC’s short borrow fee near 200% today.
However, Ortex reports AMC’s max cost to borrow at 1.05K%.
The cost to borrow, per Ortex, is the annualized percent of interest on loans, typically borrowed by brokers and hedge funds.
AMC stock is currently hard to borrow which is why brokerage firms have been increasing their short borrow fees.
Investors going long on the movie theatre company have been buying and holding their stock for over two year now in efforts to drive shares up again and squeeze short sellers from their positions.
Today, AMC’s short interest has risen to 26.39% with at least 192 million shares out on loan.
AMC’s short interest was only at 23% when buyers were able to squeeze a percent of short sellers from the play, sending share prices to their all-time high of $72.
Market News Daily – Analyst says AMC and GME Have Highest Squeeze Potential.
S3 analyst says AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME) stock have the highest squeeze potential in the market.
“As the broader stock market has been on a tear for about a month, things are looking grim for investors with big short positions in stocks like AMC Entertainment Holdings Inc. and GameStop.”
AMC’s and GME’s short interest data is what ignited the massive rallies in 2021.
Today, both AMC and GME have a high short interest of 26.69% (AMC) and 20.73% (GME).
AMC’s short interest was only 25% when it surged to its all-time high of $72 per share in June of 2021.
Short interest dropped to 14% as short sellers closed positions only to pick right back up throughout 2022 and 2023.
Both AMC and GameStop shares have been suppressed from rising through heavy dark pool trading and suspiciously through naked short selling, evident in high FTDs (fails-to-deliver).
AMC Entertainment, the largest movie theatre chain in the world, continues to innovate and creatively raise cash with a mission to erase its debt accumulated during the pandemic.
Hedge Funds Face Big Risks
Ihor Dusaniwsky, head of predictive analytics at financial technology and analytics firm S3 Partners, compiled a list of those most vulnerable stocks, headed by such names as AMC (AMC), GameStop Inc. (GME), Coinbase Global Inc. (COIN) and CarMax Inc. (KMX).
“One factor that is also killing profits for short sellers is the borrowing costs on stocks that no one is willing to part with, and the stock that figures highest on that list is AMC.”
AMC’s cost to borrow recently skyrocketed to more than 1,000% with its cost to borrow average currently being reported at 928%.
“Short sellers want to short the stock, but they are not able to get a stock borrow locate and therefore cannot execute their short on the street,” Dusaniwsky told MarketWatch in an interview.
“But, when any stock borrows become available — lenders, brokers know they can charge inflated fees as there is huge demand for the name.”
“In this case there is an AMC–[preferred stock] APE arbitrage trade that will be profitable if the conversion occurs soon because the high financing costs are eating into those expected profits every day, including weekends,” Dusaniwsky said.
But the S3 analyst isn’t the only one stating there is big squeeze potential in AMC and GameStop.
Strategist Says Mother of All Short Squeezes is Here
Market News Today – Analyst: AMC and GME Have Highest Squeeze Potential.
Interactive Brokers Chief Strategist Steve Sosnick says there’s big demand to short AMC Entertainment stock.
He says the biggest reason aside from the company’s fundamentals is its new merge with its equity (NYSE:APE).
“It’s very hard to keep the momentum in these things because economic reality does take hold.
Bed Bath & Beyond, at one point was the best performing stock on the board until reality set in and they began defaulting, averted bankruptcy, but using a deal that is so dilutive that it’s unavoidable.”
Sosnick says AMC is in a very special situation because of the proposal to merge APE with AMC common shares.
“Right now we’re seeing such a demand to short AMC partly because of its difficulties but partly because of the special situation.
The borrow rate, it costs you 700% to borrow the shares overnight — if you can find them,” said the Interactive Brokers Chief Strategist on Yahoo Finance.
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Market News Today – Analyst: AMC and GME Have Highest Squeeze Potential.
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AMC’s borrow fee rate is the annual fee hedge funds are paying to borrow AMC stock and short the company.
According to these numbers, hedge funds are burning several tens of millions of dollars every month shorting AMC Entertainment.
But Webull’s HTB fee rate works a little differently – more on that in just a moment.
A sharp rise in AMC stock will result in bigger losses for short sellers, though company shares are currently down more than -37% in the past month and -0.38% this year-to-date.
And with AMC’s legal settlement with APE (NYSE:APE) and approved reverse stock split from shareholders, there’s a lot of uncertainty of how shareholders will respond to the new market changes.
Many shareholders are growing resentful of CEO Adam Aron’s strategy, which has done nothing but dilute the stock and cause bigger losses for investors.
Still, the CEO’s strategy may be the only solution to end Wall Street’s short thesis.
But investors want more — the commencing of a short squeeze.
Webull Hard to Borrow Explained
According to Webull, “a hard-to-borrow stock is used to indicate what stocks are difficult to borrow for short sale transactions.
If you are short selling a ”hard-to-borrow” stock, you’ll have to pay a daily stock borrow fee, which changes based on the stock’s price and its availability.
Each stock’s hard-to-borrow fee rate varies depending on the volatility and scarcity of the stock.
Note that a fee rate change can significantly impact the profit or loss of any short sale.
If the stock you’ve shorted is classified by Webull as hard to borrow, the fee rate you pay on the loan of these stocks may vary depending on a number of factors, including availability and supply and demand of shares.”
Stonk-O-Tracker is currently showing there are 0 shares available to borrow through the borrow fee rate has been between 286% and 351% since the beginning of the week.
AMC Entertainment’s (NYSE:AMC) short borrow fee has risen to 244.40%.
This is the fee short sellers are paying annually to borrow short shares in efforts to suppress the stock’s share price from creating a short squeeze.
Short sellers could face serious losses as the movie theatre chain stock begins to move up in price again from retail buying pressure.
As hedge funds begin to play the long game and begin to buy the stock again, the reality for the short seller could be disastrous.
In 2021, AMC shareholders were able to move AMC’s share price from $2 per share to $20, and then from $9 per share to its all-time high of $72 per share based on momentum alone.
AMC retested the heavy demand zone at $6 per share and even retested above the $8 level in the beginning of 2023.
However, share prices have broken below these levels today.
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AMC’s Rising Share Price Spells Trouble for Short Sellers
Is AMC about to squeeze shorts again?
Retail investors continue to take on Wall Street in 2023 as long-term shareholders continue to buy and hold the world’s largest movie theatre chain stock.
#AMCSTOCK and #AMCSQUEEZE have been trending on Twitter for two years in a row now, signifying shareholders aren’t leaving.
After price rejection at $6 levels, AMC found itself trading above $7 per share having retested $8.32 earlier this year.
AMC’s short interest is already over 25% according to Ortex data, higher than the short interest it was before it began surging to its all-time high.
Retail investors have been waiting for AMC to trade above $100 per share since 2021 when it nearly reached those levels.
And with the extremely high short borrow fee rate, shareholders are waiting to see the stock’s price skyrocket again.
Short sellers betting against the movie theatre chain are no longer paying the 1% short borrow fee rate like they were last year.
According to Stonk-O-Tracker, hedge funds are currently facing a 244.40% short borrow fee rate to short AMC.
Hedge funds may be incentivized to close their short positions in AMC stock as the cost to borrow increases. At some point, it’s not worth paying that high of a fee to continue shorting a company that has fundamentally improved.
AMC is no longer the same endangered company it once was during the pandemic.
The company has improved every quarter since 2021 and has managed to get rid of a lot of debt.
The world’s largest movie theatre continues to innovate and adapt to the changing world.
While online streaming threatened the industry, revenue from box office hits has proved people are still going to the movie theatres, despite the convenience of watching movies at home.
Short sellers are betting against a recovering and innovating film industry generating billions in revenue now.
As AMC continues to prove itself fundamentally and the cost to borrow rises, expect short sellers to begin closing their short positions.
Here is where patient investors will see massive returns.
