Tag: Short Covering (Page 1 of 2)

Retail investors often wonder how high AMC’s short squeeze price potential could be.

We heard many numbers get thrown out there earlier this year.

They ranged from $1,000 to $10,000 and even $100,000 and $500,000 per share.

What exactly are we dealing with here?

And, could AMC’s short squeeze price even be higher?

Welcome to Franknez.com – the blog that fights for retail investors. Today we’re going over AMC’s short squeeze price potential.

Let’s get started!

Measuring AMC’s Market Cap For Squeeze Potential

AMC’s current market cap is approximately $21.86b with a share price of $42.60 (11.16).

When Volkswagen’s short squeeze price reached 1005 euros, the market cap was worth $296b euros, or $370b dollars, via Reuters.

Let’s calculate AMC’s share price at a $370b dollar market cap just for comparison.

$370b market cap ÷ 513.145 million outstanding shares = $721.04 per share.

AMC’s market cap would have to be almost 17x more than it’s current market cap.

Now, keep in mind synthetics/naked shares aren’t being calculated and I’ll get more into this later.

Is this market cap possible? Absolutely.

Here are a few companies with similar market caps:

• Walmart $399.23b
• Procter & Gamble $356.192b
• Nestle $366.725b
• Mastercard $363.114b
• Johnson & Johnson $428.245b

AMC’s market cap was worth $300m (Nov. 2020) -$500m (Jan. 14, 2021) earlier this year, via CompaniesMarketCap.

That’s a 72x market cap growth in a year; making a 17x market cap surge up to $721.04 per share rather feasible.

Community, a move up to the high hundreds seems fundamental to me.

Especially considering big shorts have not covered.

Short Interest

There’s not much data that ties AMC’s current share price to short covering.

We’ve seen AMC’s short interest come down 3.7% to its current 16.27% from a peak of 20% in the span of 5 months.

We’ve also seen AMC’s share price trade between the low $30s to low $40s.

One could argue that this small drop in short interest could be due to very small short covering, thus bringing the share price back up to $40 from the $30 level.

We’ve been trading sideways for quite some time now.

What’s to say the $30 level isn’t being used to cover small positions, driving the share price back up to $40; and rinse and repeat?

If that’s the play, hypothetically speaking, then the ones benefiting from apes holding are day traders and some shorts.

Buy VS Sell Ratio

If this is the case, we’ll need to start seeing more buying pressure and less selling.

Otherwise, retail investors could be creating an escape route for short sellers and a playground for day traders.

This $40 range is reminding me of the $14 level Wanda Group wouldn’t let us get passed by.

Every time we would hit $14, the company would sell shares.

Only this time it seems it’s a combination of day traders selling high, short sellers shorting the stock, and some retail selling (non-apes).

This MOASS play is not for everyone.

But if more investors dedicated this play to squeezing shorts from their positions, then retail could certainly 17x AMC’s market cap up to the $700 per share price range just from momentum alone.

Short Squeeze Price With Synthetics Covered

There are many reasons to believe millions upon millions of synthetic shares have been used to short AMC stock.

Billions!

But we don’t have the support from anyone to confirm this to the point where it can be calculated.

Here we can come up with numbers based on estimations but I’m not here to do that for you.

Do I believe synthetics have been used to drive AMC’s share price down?

Absolutely.

Do I believe hedge funds will do the ‘right thing’ by covering these?

Off exchange markets allow hedge funds to swap stock back and forth behind the lit market.

Who’s going to regulate and ensure hedge funds cover these shares?

So until that happens, you can count a short squeeze price calculation with synthetics out for now.

But it’s for this exact reason why retail must fight for a fair market and for proper regulation.

Covering billions of synthetics could absolutely push AMC’s share price into the high thousands to even tens of thousands.

The problem here is we have no proper or legal documentation that allows us to accurately identify this scenario.

A proper MOASS would require proper regulation, forcing hedge funds to close all borrowed and naked shares.

How Do We Get A Proper Synthetic Share Count?

By requesting it from regulators.

I saw a poll on Twitter tagging Adam Aron whether management should look into answering shareholder’s question regarding synthetics in the market.

Adam Aron has turned the cheek in the past saying they have no knowledge of these synthetics.

However, we should be tagging regulators, not the CEO of AMC.

I just personally don’t think he can get involved.

But if he could, as a shareholder himself, it would greatly play in our favor.

Only time will tell how this unfolds.

Setting Realistic Expectations

So, we don’t have an exact count of synthetics.

What we do know is that AMC’s short squeeze price potential can be massive when looking at just how many synthetic shares could be out there.

But we also know this.

If AMC’s market cap grew by 72x from November 2020 to November 2021, then it can certainly grow another 17x (VW short squeeze market cap example); where the share price will trade above $700 per share.

This could be caused by heavy buying pressure from retail, whales, some short covering, and FOMO buyers.

Now you have to ask yourselves, how large will my portfolio be worth at $700 per share?

Just for perspective of course.

Do you have enough shares to be happy with the results?

Or will you continue to hold 5 shares waiting for this to hit +$100,000?

Bulls make money, bears make money, pigs get slaughtered.

There’s no telling how high or low AMC’s short interest will be around $700 per share.

If it’s still relatively high then it would simply mean there’s more room for growth.

However, if there’s a significant drop then it’s a sign plenty of shorts covered.

MOASS Will Require A Synthetic Share Count

If AMC is to experience a proper MOASS, it’s imperative that regulators undergo a synthetic share count investigation.

I’m going to publish an article regarding this matter that we can pitch to regulators and get circulating out there.

ADVISORY:

Keep in mind I’m only using Volkswagen’s short squeeze market cap as an example to paint a possible scenario for AMC based on a 17x market cap from its current market cap.

These type of plays are rare and there’s not much information about them.

This means we’re paving the way.

I hope that this article provides you with a perspective that helps you identify just how high AMC’s share price can go in general.

Should we push regulators to investigate?

Of course.

Should we sit on our hands and just wait on regulators?

Hell no.

Identify how many shares you’d need to meet your goal, not counting synthetics for now, and ensure you can walk away with a significant amount of money when you’re ready to.

This play is continuously unfolding.

I would love nothing more than to create another article time from now calculating a confirmed synthetic share count for the community.

Final Words

I hope you found this article helpful in one way or another.

Again, I’m using information I have at hand.

I could calculate several scenarios with different market caps but the reality is there could be enough synthetics to take AMC to Pluto and into the several thousands to tens of thousands of dollars per share.

Whether culprits take accountability for these synthetics or not will be up to us to fight for.

With that being said, I’m going to be using my platform to voice tackling this synthetic share count problem.

We cannot let hedge funds get away with this so easily.

I’d love to hear your thoughts. Leave them in the comment section of the article below.

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