AMC And GameStop Skyrocket As Reddit Traders Rally Around Meme Stocks Anew

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AMC shares are at their highest levels since late January, when meme stocks soared and fueled uncertainty that tanked the broader market.

Shares of movie theater chain AMC Entertainment and brick-and-mortar retailer GameStop, two of the top meme stocks embroiled in a late-January trading frenzy, have posted a stunning run this month, surging nearly 50% and 35%, respectively, as Reddit traders continue to plow into the highly shorted stocks despite still-bearish forecasts from analysts—one of several signs that risky market activity is still running full force.

Signaling that frenzied trading once again fueled a short squeeze, AMC short interest rose to a record high in mid-April before falling by month's end as trading volume and prices surged well into this month, likely forcing the institutional investors betting on a price decline to cut their losses by buying back shares at higher prices.

Despite the celebratory retail traders, analysts are still overwhelmingly bearish on shares: Citi's Jason Bazinet reiterated a sell rating for AMC Thursday and issued a price target of just $3.70, saying the company's high debt load adds to the risk of its uncertain recovery from the pandemic, as more studios forgo theater releases in favor of at-home streaming.

 

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