AMC and different meme shares are falling on Friday to wrap up a wild week
The AMC Empire 25 near Times Square is open as New York City theaters reopen on March 5, 2021 for the first time in a year since the coronavirus shutdown.
Angela Weiss | AFP | Getty Images
It was a full week for AMC Entertainment and other meme stocks as frenzied trading, inspired by Reddit’s chat rooms, swept Wall Street again.
These speculative stocks fell on Friday but still ended the wild week on massive gains.
AMC stock lost 6.7% on Friday after falling 18% in the previous session. The stock was still up 83.4% for the week. BlackBerry fell 12.7% on Friday but gained 37.6% this week. Bed Bath & Beyond lost 0.6% but ended the week 13.3% higher.
Original meme stock star GameStop lost 3.8% on Friday after gaining 111.9% this week. Trading has been relatively quiet for GameStop as AMC attracted most of the attention.
AMC is wasting no time capitalizing on its massive rally and raising new capital. CEO Adam Aron asked shareholders in a YouTube live chat on Thursday evening to allow his company to issue up to 25 million more shares. That came after AMC sold 20 million shares in two separate transactions last week, raising around $ 800 million in cash.
The first transaction involved Mudrick Capital, which paid more than $ 230 million for 8.5 million shares. Then AMC announced Thursday that it had sold an additional 11.5 million shares for $ 587 million.
Trading volumes in AMC and other meme stocks skyrocketed this week as retailers at the infamous WallStreetBets forum encouraged each other to pile up. AMC and Blackberry traded over 500 million shares on Thursday and became the two most active stocks on the Nasdaq.
The frantic trading frustrated many Wall Street analysts, who predict stock prices based on company fundamentals. Bank of America analyst Curtis Nagle threw in the towel on Beth Bath & Beyond and gave the stock a “no rating” rating.
“BBBY’s share price surge is in line with big moves over the past week in ‘meme stocks’ like GME, AMC and BB,” said Nagle in a statement to clients. “As a result, we are moving to No Rating as we believe BBBY stocks will no longer trade on fundamentals. Investors should no longer rely on our previous investment opinion or price target.”
Bank of America also stopped reporting on GameStop, citing a reallocation of resources.
Short-covering could be at play again with these speculative names preferred by Reddit traders. According to data from S3 Partners, AMC has sold about 18% of its floating stocks short, compared to about 5% for the average US stock. Short sellers betting against AMC suffered $ 2 billion in losses this week, S3 data showed.
“We saw AMC doing short coverings this week, but right now we are definitely not seeing any wholesale short squeeze on this stock,” said Ihor Dusaniwsky of S3 Partners.
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