AMC stock prices tanked by more than 20% on Thursday morning after it was reported that the movie theater chain would sell 11.55 million shares, but it came roaring back only hours later. That was after the company’s stock skyrocketed Wednesday, sparking memories ofback in January.
AMC’s stock drop came after it filed a Form 8-K with the US Securities and Exchange Commission to sell 11.55 million shares. The shares price dropped so quickly that it led to the New York Stock Exchange halting trades of AMC stock.
The movie theater chain’s stock price started the day at $58.10, went up a little, but then dropped to a low of $37.66. It has since rebounded to just below $59 as of 1:30 p.m. ET.
AMC was the talk of the stock market on Wednesday. Its stock price opened that day at $37.52, a significant increase from its price of $9.71 on May 3. AMC shares ended the day at $65.22, a 95% increase for the day.
As for why the sudden jump in stock price, there were multiple reasons.
WallStreetBets traders strike back
Traders on the— who were responsible for the only a few months ago — were all in with the movie theater company as news came out that people betting against the stock, known as short-sellers, had lost more than $1 billion. Short-sellers lost $2.8 billion on Wednesday alone, according to Insider.
Like with GameStop, the WallStreetBets traders anticipated a “short squeeze,” which is when hedge funds that bet against AMC were forced to buy the stock at a higher price in order to avoid large losses.
One hedge fund, Mudrick Capital, did the opposite by buying $230 million worth of shares of AMC on Friday and then selling them Wednesday for a hefty profit, and the trade kicked off the day’s rally.
AMC investing in investors
On Wednesday, the theater chain launched AMC Investor Connect. This portal is intended for retail investors who are noninstitutional stock traders like the ones found on the WallStreetBets subreddit. Investors who sign up at the website will get a free popcorn and other benefits while also receiving direct investor communications from the company.
Summer blockbuster season is back
As COVID cases continue to fall in the US and the, there are expectations that movie theaters will be packed this summer.
kicked off the season, taking in $58 million over Memorial Day weekend, which is the highest movie opening during the pandemic. are some of the big movies coming to theaters this summer.