Will AMC squeeze again? In 2021, the movie theatre chain stock skyrocketed from $2.50 early that year to $72 per share in the summer.
Many retail investors held the stock even as the CEO cashed in more than $40 million.
The stock dropped more than -84% in 2022 leaving majority of holders with significant unrealized losses, and very few still in profit.
AMC Shareholders have continued to raise awareness of market injustices surrounding dark pools, naked shorting, and off exchange trading.
Since the events of the ‘meme stock’ frenzy in 2021, ‘We The Investors‘ has reached a historic milestone, representing the retail community in direct engagement with SEC Chairman, Gary Gensler.
Today, Ortex is reporting AMC’s short interest at a high of 22.10%.
This is nearly the short interest AMC had before the stock shot up from $14 to $72 per share.
The high short interest is a strong indicator AMC has the potential to squeeze again.
The question is, will AMC stock squeeze in 2023?
First, let’s dive into what triggered the event in 2021 to better understand whether today’s market conditions are in retail’s favor.
Related: How to Buy AMC Stock (2023 Guide)
What Caused AMC to Spike?
So, what caused AMC stock to go up?
In short, it was a high short interest percent and massive buying pressure.
#1. High Short Interest Percent
The short interest in a stock is the percentage of the float that is essentially being shorted.
When you have a lot of short sellers betting on the downside of a company’s stock, there’s a probability to squeeze them out of their positions if the price shoots up quickly.
Short sellers may see significant (unrealized) losses momentarily and choose to either close their positions for a loss or keep accumulating short positions if they think shares will come back down.
What happened with AMC is that when the stock first shot up from $2.50 to $20 per share, short sellers began to take big positions.
Therefore, we saw the short interest increase.
But once AMC’s share price began to rise to $9 per share, then $14 per share, and eventually break that resistance, short sellers began to close their positions to refrain from accruing larger losses.
This is when we slowly began to see AMC’s short interest decrease from 22% to 14%.
As AMC began to come down from its all-time high in June, AMC’s short interest began to rise again, signifying short sellers were getting back in.
Today, AMC’s short interest is at 22.10% according to both Fintel and Ortex.
This is big.
#2. Massive Buying Pressure
Massive buying pressure is what triggered AMC shares to rise.
See, this wasn’t just a one-time spike, but rather days of nonstop bullish momentum.
AMC Entertainment stock was experiencing extremely high intraday volume of 700 million and 900 million prior to hitting its all-time high.
Previous months still consisted of several hundreds of millions in trading volume.
Discords were flooded with anxious and excited investors as they saw shares rise over and over again.
The battle of $8.01 was known as a victorious day for retail investors who were buying the dip every time the market would bring the price down.
Days such as the battle of $8.01 influenced what was to come next.
Absolute Armageddon for hedge funds betting against AMC Entertainment and an emerging retail community Wall Street never saw coming.
Market Conditions for A Short Squeeze
The market conditions were completely different when AMC surged to $72 per share than what they are now.
In 2022, we entered a bear market that brought the entire market to its knees.
Experts are saying we may experience continued volatility in the market as signs of an upcoming recession rise in 2023.
Also read: Where Is the Stock Market Headed in 2023?
However, stocks such as AMTD Digital, Inc. proved that market conditions don’t have to be set in a bull market to squeeze.
HKD stock surged more than +20,000% in August of 2022.
Shares rose from $13.54 to $2,200 in weeks from sheer buying pressure, fresh from its IPO.
The truth is a short squeeze may be triggered both during a bull market and bear market.
One key element we’re discovering that triggers a short squeeze is heavy buying volume.
Heavy buying volume is what allowed GameStop to squeeze to $483, HKD to $2,200, and AMC to $72 per share.
*Poll of The Week
Will AMC Squeeze in 2023?
AMC Entertainment has both the high short interest and retail community behind it to trigger another short squeeze in 2023.
However, recession conditions might cap the ability for retail investors to buy in heavy again this year.
Layoffs, rising interest rates and inflation could slow down how much liquidity is being pumped into the stock market.
This makes triggering an AMC short squeeze in 2023 more challenging than if the U.S was currently a thriving economy.
Also read: How to Get Your Money Right in 2023
Shareholders should not be discouraged; anything can happen this year.
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