What China’s Evergrande Debt Crisis Could Mean For AMC

Evergrande Group AMC
Evergrande Group – Stock Market Crash

It’s incredible how much debt is allowed to accumulate in one company. The Evergrande Group owes approximately $300 billion and investors fear it could destabilize China’s financial system.

The massive selloff seen in the Hong Kong markets heavily influenced the New York Stock Exchange. If one of the world’s top economies crumbles, what will happen to the U.S markets, and what will it mean for AMC stock?

franknez.com evergrande

Welcome to Franknez.com – I saw some apes in the community wanted to hear my thoughts on how Evergrande could potentially affect AMC stock.

Lets get started!

A Preview To An Economic Downturn

Blood everywhere in the markets, and this seems to only be a preview to what’s coming. We received a glimpse into the future of the repercussions caused by overleveraged companies.

I think it is safe to say the feds are sweating bullets from this economic trailer. They’ve been pumping trillions of dollars into the system and loaning overleveraged institutions money that can’t even get paid back.

Large hedge funds have lost billions of dollars while short seller losses continue to accumulate in the millions. This disruption has been caused by retail investors creating buying pressure in heavily shorted stocks.

Two of the biggest ‘meme stocks’, AMC and GME, have raised havoc for financial institutions betting against AMC Entertainment and GameStop.

According to insiders within the retail community, TD Ameritrade has never seen this much shorting take place in the history of the markets.

The word is there is no guarantee that the Group will be able to meet its financial obligations, with the company hiring a team of outside advisors.

How Will Evergrande Affect The U.S?

We saw Evergrande’s slip affect the three main indexes in the New York Stock Exchange. The collapse of the Hong Kong markets would send shockwaves through global financial markets, including the U.S.

Just about every stock and crypto in our markets was significantly down after the Evergrande announcements. We saw massive liquidation in both of these sectors.

If China is unable to step in and protect its economy from financial collapse, the U.S markets will too experience a stock market crash. Though I think the NYSE is due for one anyway, with or without Evergrande.

The Great Uncovering

Hedge funds in the U.S have been suffering from losses all year due to retail investors buying heavily shorted stocks. Short sellers have been overleveraging their positions to drive the share price down no matter the costs.

They too have been digging too deep of a hole to close their overleveraged positions. With billions of short shares borrowed and zero positions closed, hedge funds are a threat to the stock market and U.S economy.

As the market demands for debt to be repaid, hedge funds will need to accommodate to margin requirements by liquidating some or all of their positions. In doing so, stocks such as AMC and GME will experience major upswings.

A stock market crash could force short sellers to get margin called, where their accounts will be forced to get liquidated if they cannot meet the margin requirements.

Closing out positions in AMC, GME, or any other momentum stock that has been heavily shorted, would cause a short squeeze. This is why retail investors holding AMC stock or GME stock should not worry about its current volatile share price.

The Share Price Is Psychological

If you’re holding a heavily shorted stock with negative beta, such as AMC or GME stock, chances are they will react the complete opposite to the rest of the market during a stock market crash.

So why was AMC and GME red during the Evergrande announcements? Shouldn’t both these stocks have been green oppose to its counterparts? One thing we have to keep in mind is that hedge funds borrowed more than 4 million short shares to drive the stock price down.

Both of these stocks’ performances were masked by continued shorting and psychological warfare. In theory, stocks with negative beta should have reacted the complete opposite.

We have seen multiple manipulation tactics in the markets to understand that hedge funds will use every resource possible to attack retail investors.

What Will Happen To AMC Stock If The Market Crashes?

Major selloffs from institutions holding AMC stock would take profits, resulting in the share price taking a massive dip. This is the opportunity seasoned retail investors in the ape community have been waiting for.

Massive buying pressure from the community would pump the price back up and could force shorts to cover their positions once and for all.

The reason I say AMC’s stock price is psychological is because the stock will continue to go down. This could very well be the dip before the rip.

And it will be 100% up to retail investors whether they choose to play offense or not. As for me, I’m taking advantage of the biggest dip yet to add to my position before hedge funds begin covering their positions.

However, follow what your conviction towards the stock tells you. Trey said it best when he says we are all adults and no one can decide what we do with our money but ourselves. “Have a plan.”

Evergrande Group and AMC

Prepare For The Challenge

I’m going to share my real thoughts with you on this short squeeze play with AMC. I am not selling my AMC stock and I am taking any massive dip that comes our way as an opportunity to increase my position.

It’s really that simple to me. What’s going to be challenging for new retail investors is seeing their investment drop little by little, every day.

What’s prepared me for this challenge is my conviction towards the stock. The data says it all and I don’t mind holding AMC through the winter.

The longer AMC shareholders hold the stock, the more money hedge funds lose. And although AMC stock could potentially face a steep drop, I know holding my stock is causing short sellers serious damage.

Should You Keep Holding AMC Stock?

When GME began skyrocketing, only a bunch were able to cash in some serious profits. These were the diamond hands who stuck to their convictions.

I can’t tell you to hold, but I can tell you that I’m going to hold. I don’t care what gets thrown my way or about what the people who’ve lost their conviction have to say.

See, at some point short sellers have to cover their positions. Whether that price point is at $40, $30, or even $10, no one knows. What I do know is that the retail investors who get to experience the MOASS will be those who held AMC stock the day shorts decided to cover.

And that’s good enough for me.

franknez.com

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16 Comments

  1. Alfredo Iznaga

    I do not know English, I use the translator to write so I apologize if there is any inconsistency, I am not an expert on this, but I am still firm and buying a little in the descents, thanks Frank for your articles and your good wishes to encourage the who want to tire in this fight, I remain firm until the end.

  2. Brandon

    Aloha and mahalo from Maui! Hodling!!!

    • Frank Nez

      Aloha brother! 🦍

  3. RayRay

    not true. they have x numbers of shares shorted (sold at a decided price) that they must repurchase. irregardless it is their obligation to cover. when is the question. if they shorted 100,000 shares at $10, they sure as hell wont cover at 40. not voluntarily.

    if the market crashes and the price of loss gets too expensive, there will be margin calls to satisfy as risk gets higher. lets say apes own 85% of all shares collectively. if margin calls require 60% of shares ne bought to cover, you see the dilemma. Apes wont sell and therefore no more borrowing at this point to skirt around covering the calls. so the remaining 15% of shares if they are even for sale are being requested to be bought. hmmm. Apes not selling at lets say $65 because sentiment has started to raise the price.

    well, they have to offer more and more to buy because a selling deficit will exist. the demand will drive the price up but only for the smaller Shorts at first. once the writing is on the walls, its gonna get into trying to buy shares that are not for sale yet.

    Apes are now in control. they need to act as a group (say as IF they were one entity holding the shares). why not? HFs are in essence the same thing. just fewer people holding a large sum of ill-gotten money.

    Apes need to be careful when this happens because simple math says 500mil shares in the public float. Lets say 4 billion shares are sold waiting to be bought back. synthetic or not that is about 8x the float.

    historically, how many examples of 8x the stock being borrowed that had to be bought back? what happened to that stock price? is it a straight 8x the “starting to cover” price or is it exponential? i don’t know what that answer is. but, if Ape nation wants to put HFs out of business for robbing our descendants life savings, 401ks, robbery through stock manipulation and misinformation, collusion insider trading, etc… etc…
    the Apes must never sell!

    wow! that’s harsh! but, its the only way to stop this!

    so, how can Apes exchange the wealth? Ahh! the answer is not what you think! in order to really truly cause any HF involved in this squeeze to be put out of existence, they must LEVERAGE the shares they hodl!

    LEVERAGE? YES! Leverage the HFs and short THEM! At this point naked PUTS will be a safe play. Apes can tirn the tables and do to the HFs what they have been doing to every ancestor, company, small business that they shorted out of existence since the beginning of the stock markets.

    WOW! Now THERE’S what the Apes are gonna have to do. AND to be fair. ultra rich apes should share across ape nation equally. we’ll all be tens of million-aires! trillions and hundreds of billions of dollars shared across ape nation from every HF and anyone who was in bed with them when this all started! .

    i will be willing to do it. every Ape with even 1 share deserves an equal share of the wealth. it couldn’t have been done without them.!

    what do you think? one day it will be time for apes to share. how do they know who to share with? answer- any ape still hodling at the end of HFs existence! easy!

    any paper hands that got out made money, but, they helped the HFs try to cover. no share of the “big” pie!

    • Ray

      if Apes are truly brothers…. this is the way!

  4. Kashan

    You really see this lasting through the winter? I don’t get how the HFs have kept it going this long. I feel like we’re almost at the MOASS.

  5. stevehoping

    You indicate big institutions may sell their AMC shares. However, if I’m not mistaken, for them to sell they have to physically possess the share. A loaned share does is not possessed. Whomever they loaned the share to would have to return it before the institution can sell it. And where do they need to go to to buy that share? Us Apes and we ain’t selling until our price goals are hit.

  6. Diego

    I LOVE YOU APES πŸ¦πŸ™ŒπŸ’Ž HODL. FROM ITALY

    • Frank Nez

      Love you brother 🦍🀝
      Cheers from Cali

  7. ZZZman

    I have always felt as though the HF’s, as the battle over AMC began, knew how they could keep the price down, spread FUD, etc. and most importantly just bought them time (which they have paid a heavy price for) but their only exit strategy has never been clear to me. At best I think at a certain point they hoped their illegal and unethical tactics would lead to retail investors getting frustrated and they would give up and liquidate their positions. As the rise of the Apes became so vast that winning a war of attrition obviously was an untenable strategy. So I guess my question or the feeling I get is, because MOASS could be so disruptive (in a good way) to the market that the HF’s are going for the “too big too fail tactic” whereby they hold so many shorts that the government will need to step in and bail them out, enact emergency laws, etc. in order to keep the market, large banks, financial institutions, HF’s, etc from crashing. This would be in the form of the 2008 style bailout or debt forgiveness which finally lead to the Apes getting screwed. I probably sound crazy but if any of what I’ve said you have an opinion on I would love the feedback. -All Hail Frank “Caesar” Nez

    • JM

      You nailed it and nailed it good. I’m with frank, I buy more and watch them all bleed out, I can wait. These people are parasites and enough is enough

      • Frank Nez

        Enough is ENOUGH! πŸ‘

    • Frank Nez

      Thanks for your comment brother! Man it’s just crazy because they continue to find loophole after loophole. I feel like someone has to cover those positions regardless. I mean the money is there, there’s no shortage of it.

  8. marq134

    i really like it

  9. Moto

    As Kenan Grace says “why do stocks drop? So you can buy more!”

    • Frank Nez

      Love it!

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