Market News: Here’s the latest on AMC and APE stock | APE short squeeze update.
A new proposal by CEO Adam Aron has been circulating the retail community where shareholders will get to vote on the conversion of APE equity to AMC common shares.
Shareholders are anticipating short sellers will close their positions in APE if the conversion to AMC common shares is approved.
While no official voting proxy has been distributed amongst shareholders, the talks are certainly on the table.
In the case of APE and AMC, the merge between the equity and common shares may temporarily increase the share price of AMC stock.
This is where short sellers are caught in a bind.
Short sellers betting against the company would see big losses during the surge of the newly reflected share price.
Short sellers will have the option to close out their positions completely prior to the conversion or keep holding their position.
While they will not be obligated to close out their positions, they are at higher risk from momentum taking over and further escalating rising share prices.
Here is where shareholders have the opportunity to buy in heavily to keep short sellers from only pushing the price down after the merge.
As short sellers begin to fear the tide turning against them, the buyback of shares will result in a short squeeze.
If shareholders fail to create momentum, then short sellers may identify weakness in buying power and further add to their short positions.
Is an APE Short Squeeze Over?
APE short squeeze news and updates.
Not quite.
There’s a strong possibility short sellers close their positions in APE prior to a conversion (if approved by shareholders).
In doing so, they avoid seeing share prices rise and the probability of having losing positions during the merge.
APE just became the #1 shorted stock on Yahoo Finance’s ‘Top Most Shorted Stocks List’.
According to Fintel, APE has 8.9 million shares going to dark pools with approximately more than 50.6 million shares having been shorted, via NYSE.
APE’s volume has been above its average volume of 16 million, but institutions are driving the price down through a significant number of borrowed shares.
One can say APE (AMC’s Preferred Equity) is one of the most manipulated securities in the market.
$APE comes just above Bed Bath & Beyond (BBBY) and Carvana (CVNA).
Other companies listed on Yahoo’s Top Most Shorted Stock’s includes Beyond Meat (BYND), MicroStrategy Inc. (MSTR), and Marathon Digital Holdings, Inc. (MARA).
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.
APE FTDs Chart – Franknez.com | Is APE shorted?
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.
AMC Issues Warning of Possible APE Short Squeeze
That same month in October, AMC released a statement warning short sellers of the possible losses they could incur in the event of a short squeeze.
“purchasers of our Class A common stock and AMC Preferred Equity Units could incur substantial losses if there are declines in market prices driven by a return to earlier valuations; to the extent volatility in our Class A common stock and AMC Preferred Equity Units is caused, or may from time to time be caused, as has widely been reported, by a “short squeeze” in which coordinated trading activity causes a spike in the market price of our Class A common stock and AMC Preferred Equity Units as traders with a short position make market purchases to avoid or to mitigate potential losses, investors purchase at inflated prices unrelated to our financial performance or prospects, and may thereafter suffer substantial losses as prices decline.”
Retail investors have been buying APE stock in efforts to trigger a short squeeze like when shareholders drove AMC’s share price from $14 to $72 per share.
While one might argue that the price surge wasn’t an actual squeeze, it was certainly a significant move to the upside.
Especially after trading at $2 prior to the ‘meme stock’ frenzy.
Will shareholders be successful at creating a short squeeze for APE?
Afterall, APE is currently one of the most shorted stocks in the market.
AMC has been trending downwards since its rise up to $72 per share and now retail investors are wondering, will AMC stock go up?
In a recent article I break down 3 BIG factors that have influenced AMC’s downward trajectory in the past few months.
Although AMC’s share price has been plummeting, the demand for the stock has not.
This key point is going to play a big role in what happens to AMC stock after this bear market is over.
Welcome to Franknez.com – today I want to lay a few key points you should take into consideration if you’re holding AMC stock or thinking of buying it.
Let’s get started!
AMC stock had an incredible year in 2021.
The stock reached an all-time high of $72 per share with only 21% short interest at the time.
Once the share price began to come down, AMC’s short interest had come down to 14%.
As we start the new year, AMC’s average daily volume is incredibly high.
AMC has an average volume of 38.2 million with many days surpassing this amount.
So why isn’t AMC’s massive demand reflecting in the share price?
That’s the question the ‘ape community’ has been asking regulators all year 2021.
Too many eyes are on regulators right now and at some point, some suppression inflicted by hedge funds will have to subside.
And aside from Omicron and Covid news affecting the entire market, AMC’s massive volume will eventually push the stock price up during a correction.
What does this mean for retail investors?
If you’re looking to get in on AMC for a short squeeze, know the risks, but understand that once this stock takes off you will not be able to buy it at these prices again.
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Deflating the short interest
Deflating AMC’s short interest like we saw back in January and June means AMC stock will go up significantly higher from its current share price.
Small short covering allowed AMC to reach $72 per share back in June of 2021.
So why can AMC stock still skyrocket?
Despite the heavy buying volume from retail, AMC still has more than enough short interest percentage to squeeze shorts from their positions.
2022 is only the sequel to 2021’s runup.
The reason mainstream media doesn’t want you to know this is because of their ties to hedge funds and private financial institutions.
These institutions are ‘short’ on AMC and GameStop, meaning they’re betting against them.
Pushing propaganda that will feed their narrative is the safest way for hedge funds to derail retail from further buying the stock that could cause them to default.
Hedge funds such as Melvin Capital, Anchorage Capital, Mudrick, & Archegos are out of the game.
A short squeeze play has nothing to do with AMC Entertainment’s fundamentals.
The reason being is that retail goes based off of how much shorting there is in the company stock.
Buying the stock en masse (big volume) will cause AMC stock to go up, forcing shorts to close their positions and buy back their shares; triggering a short squeeze.
A short squeeze play does not depend on the performance of the company as a business.
AMC’s fundamentals are not the greatest, the company does have a lot of debt.
However, something mainstream media is not discussing is just how much their debt has gone down each quarter since 2021.
AMC Entertainment’s fundamentals are a discussion I will be touching topic on another blog post very soon so be sure to join the newsletter.
Tesla has now followed by accepting cryptocurrency as a form of payment on their merchandise too.
Debt is the only thing holding AMC Entertainment from being a fundamental buy in the eyes of most in the industry.
AMC Entertainment partnerships
AMC partnered with Chance the Rapper last year for his concert movie release.
CEO Adam Aron announced that they would be working on partnering up with industry leaders for licensing agreements that would allow AMC to provide more of these experiences to their audiences around the world.
Another successful showing was the UFC fight they held in theatres.
The CEO also expressed his optimism surrounding showing highly anticipated sports events in theatres, granted licensing of course.
Retail investors have been specifically waiting for an AMC-GameStop partnership.
A topic Adam Aron teased could be in the works at some point.
AMC theatres released “GameStop: Rise of the Players” on January 28th, earlier this year.
One thing you cannot deny is the community strength and company relationship to its shareholders.
It’s never been seen before.
Do you own AMC stock?
Leave a comment below.
So, will AMC stock go up again?
Based on trader sentiment, community sentiment, and continuous innovation from the company, AMC stock will surge again.
This bear market won’t last forever.
And although the entire market is rather shaky at the moment, there will be a correction.
Hedge funds might have leverage to short the stock, but the people aren’t leaving.
AMC Entertainment will have to focus on growth and revenue if they are to get out of debt in the future.
Will retail investors trigger an APE short squeeze?
AMC’s Preferred Equity (APE stock) has made it available for the company to raise cash instantaneously.
The company announced in September it would sell up to 425 million APE shares to pay down their debt.
AMC Entertainment has steadily improved fundamentally since 2021 when retail investors injected the company with liquidity to squeeze short sellers.
The movie theatre chain has acquired several new theaters, entered the crypto and NFT space, and has beat every quarter for two years in a row now.
Despite what mainstream media has portrayed, retail investors have not ditched the pursuit of squeezing Wall Street again.
The massive retail community who participated in the trading activity which caused AMC and GameStop to rise are now looking to squeeze AMC’s Preferred Equity, APE stock.
How high can APE stock go?
Let’s discuss it.
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What is APE Stock?
APE stands for ‘AMC Preferred Equity’ and is a tradable security in the stock market deriving from an AMC stock split.
Retail investors who held or purchased AMC shares before the stock split would be granted with 1 APE share for every AMC share they held.
The stock split was marketed as a dividend which confused many shareholders at first.
Some retail investors weren’t too pleased to hear AMC’s share price would be divided evenly between AMC and APE stock, but others viewed the split as an opportunity.
The main purpose of APE stock was to allow the company to capitalize from its shareholders during a time of need.
AMC Entertainment would need approval from shareholders to dilute the stock and raise cash, but not with APE.
APE would act as a pool of liquidity for the company to pull money from.
How is APE’s Value Determined?
At first, APE’s value was divided in half from the close of AMC’s trading price prior to the stock split.
Both securities’ value has been determined by market conditions since.
This means how high APE stock goes will highly depend on how much buying power the security receives from retail and institutional investors.
But the market in general has been tough for most investors.
Today’s bear market has only set lower prices for both AMC Entertainment and APE stock.
It’s fair to predict that APE’s value will see more downside before a reversal.
