Trading in shares of Reddit favorite AMC halted after all-time high
Trading of AMC Entertainment shares was halted several times on Wednesday after the stock, a favorite among Reddit traders, saw a surge in activity and price.
AMC stock rallied on Wednesday, with the selling price surging more than 100 percent, CNBC reported. Trading was paused for a number of brief periods throughout the morning.
More than 500 million shares of the movie theater chain were exchanged in the morning, according to CNBC, far outpacing the stock’s 30-day average volume of 143 million shares.
At one point in the day, according to CNBC, AMC’s stock price peaked at $72.62, far greater than its previous intraday high of $36.72, a record that was set Friday.
According to Bloomberg, the price of the stock more than doubled on Wednesday, pushing the company to top 400 percent in just the past two weeks.
The stock is up more than 2,800 percent year to date, CNBC said.
AMC’s stock rally follows a pattern of publicly traded companies that are favored by investors on Reddit, known as “meme stocks,” surging in price. These investors have made efforts to drive up the price of stocks that traditional hedge funds have shorted.
The most notable incident was GameStop earlier this year, when traders on the app Robinhood dumped money into the company. Robinhood in January halted buying and trading of GameStop stocks, in addition to AMC, which attracted widespread criticism.
The app eventually lifted all temporary restrictions on trading the stocks.
AMC’s Wednesday rally came despite reports that the hedge fund Mudrick Capital sold its 8.5 million shares of the company, which it had recently acquired, CNBC reported.
AMC disclosed in a securities filing that it raised $230.5 million through a stock sale to the investment firm, and that it planned to use the money for potential acquisitions, upgrading its theaters and deleveraging its balance sheet, according to CNBC.
AMC was reportedly on the brink of bankruptcy as movie theaters across the country were forced to close amid the COVID-19 pandemic. According to CNBC, the company had fallen behind on its rent.
As a result, short sellers flocked to the stock to try to turn a profit on the declining company, CNBC said.
Retail investors, however, made efforts to fight back against the company’s decline, after being inspired by Reddit chats.
The business news channel reported that short traders lost an estimated $1.23 billion last week as the stock’s price surged by more than 116 percent.
The stock’s rally, however, is unlikely to affect the bottom line for the company. Analysts cited by Bloomberg still predict the movie theater company will lose almost $100 million over the next 12 months.
The Hill has reached out to AMC for comment.