Many of you might be wondering why AMC didn’t squeeze last year in 2021.
The stock had an incredible year overall.
Retail investors who got in for a short squeeze play early came up more than 1000%!
However, these retail investors knowns as ‘apes’ continue to hold the stock into 2022.
After all, people got in for a short squeeze play, not to make a quick buck.
So, why didn’t AMC squeeze last year in 2021?
Welcome to Franknez.com – today I want to touch topic on AMC since it’s been the most anticipated stock of all 2021. You’re going to want to stick around for this one.
Let’s get started!
AMC was one of the most searched for ticker symbols in 2021 and consistently trended on Yahoo Finance throughout the year.
Many of you aren’t new to the blog.
I was an early adopter in the AMC saga and helped a ton of people get in on this play early.
So, what was so special about buying AMC stock in 2021?
After GameStop’s share price increased to incredible levels nearing $500 per share, retail investors noticed AMC’s short interest was also high.
A high short interest meant the stock was heavily shorted therefore short sellers could be squeezed out of their positions, triggering a short squeeze (massive price flux.).
AMC experienced massive gains from $2 per share up to $20 per share.
Momentum then further escalated AMC’s share price to $72 per share before slowly cooling off to today’s price levels.
However, AMC didn’t fully squeeze last year, it merely removed small shorts from their positions during these runups.
But more on that later, let’s break down what is currently going on with AMC stock.
AMC Continues to Be Shorted
AMC was one of the heaviest shorted stocks in the market last year.
Though mainstream media might claim that AMC squeezed last year, it only experienced gamma squeezes (momentum).
Because the short interest did fluctuate, we can access that some short covering did indeed occur.
However, AMC’s short interest is still relatively high.
When AMC soared to $72 per share last year the short interest dropped from 20% to 14%.
AMC’s current short interest is at 20%.
This means there’s ample room for AMC’s share price to continue surging in 2022.
Why didn’t shorts cover their positions in AMC last year?
A few short sellers did cover their short positions in AMC last year, though according to the short interest many open positions remain.
In fact, according to the short interest data, there’s approximately more than 102 million shares on loan that have yet to be closed.
Financial institutions have to close these positions at some point, and that’s whether they’re profitable or not.
Because short squeeze plays are rare, we’re learning more about their development through AMC and GameStop.
The matter of the fact is that AMC Entertainment is no longer going bankrupt so even if the share price drops below $10 and shorts cover profitable, we can expect to see a massive runup from the buying pressure happening all at once.
Why bigger shorts didn’t cover AMC last year is almost like saying why didn’t retail investors sell their stock last year.
Both retail and short sellers are going long on AMC Entertainment stock.
This means eventually individual people from both groups will begin to cave in.
And it’s an entire ecosystem of some taking profits or cutting their losses.
As AMC’s share price continues to drop in 2022, it provides short sellers with open positions in AMC from last year to finally close this year.
Massive price movements.
Market manipulation events
Retail investors who bought AMC stock last year saw a number of ways hedge funds manipulate the market.
From borrowing shares that don’t exist to short the stock, to OTC trading and dark pool trading, retail saw it all.
These predatorial strategies were used in efforts to discourage retail from further buying the stock.
Last year we saw Melvin Capital almost close if it weren’t for Citadel giving them a lifeline.
Mudrick threw in the towel and Archegos went bankrupt.
Anchorage Capital closed after 18 years; they had more than 4 million put options in AMC stock and were one of the top 10 institutional firms shorting AMC stock last year.
Another hedge fund on that list is Citadel Securites who lost billions in AMC in 2021, negatively affecting their customers.
Will this trend continue in 2022?
Leave a comment below.
How long can shorts drag not covering?
Just as retail investors can go long on a stock for many years, short sellers can also drag not covering for long periods of time.
This squeeze play will have intermittent episodes where we see some covering before new shorts open a position.
AMC Entertaiment is a hot spot for short sellers to bet against the stock and the company’s progress.
Will AMC Squeeze in 2022?
As AMC’s share price continues to tumble, short sellers may begin to take profits by closing their short positions.
It’s this buying pressure that will ultimately lead AMC to experience major price moves this year.
Whether these price moves will trigger a chain of short covering or not is an event that has yet to unfold.
Could AMC squeeze in 2022?
But while regulators fall back on the uncovering of synthetics, for now the short interest is the only data that confirms how much potential this squeeze has.
Don’t miss today’s topic discussion on YouTube at the end of the article.
You can read more about AMC’s short interest data for 2022 here.
Subscribe to the blog for more content
Consider subscribing to the newsletter to receive market news, stock and crypto alerts, and updates on AMC stock.
Don’t forget to watch this topic’s discussion on YouTube below.
Unless we get FOMO and the price up significantly, not just a few bucks, I see no reason for shorts to cover their open positions. Not costing them any significant money to just hold their shorts at this time. Even if their paying $1 million a day in interest, still a lot cheaper than letting the stock soar by closing their positions.
Great content! Keep up the good work!
Much appreciated, thank you for reading.