GLOBAL stock prices have tumbled amid fears about spiking Covid cases, Wall Street volatility and US economic aid plans.
So what is the latest on the shares of AMC Entertainment – which owns America’s largest movie theater chain?
But first, a word of warning: buying stocks and shares is a risky business.
Investing is not a guaranteed way to make money, so make sure you know the risks and can afford to lose the money.
No stock is guaranteed to rise or fall, and it is extremely dangerous to invest money you cannot afford to lose.
Plenty of people have lost a lot of money betting on shares, so proceed with extreme caution and use common sense.
What is happening with AMC’s stock?
Shares of GameStop and AMC Entertainment soared again on Friday, January 29, after the stock market opened.
They spiked after online platform Robinhood lifted its controversial restrictions on trades.
The companies have shot higher this week following a campaign by amateur buyers spurred on by a Reddit group in opposition to investors who have bet on declines.
About 45 minutes into trading on January 29, the Dow Jones Industrial Average was down 0.6 per cent at 30,414.05.
AMC Entertainment is "one of the hottest stocks of 2021" after its shares soared nearly 300 per cent on Wednesday, January 27, says CBS News.
It explained that the "ailing theater chain" is this week among several beneficiaries of a bid to punish short sellers with soaring prices.
Amateur investors on Reddit's WallStreetBets group have already sent shares of struggling retailer GameStop up more than 2,000 per cent during the past month.
And, the community went after other stocks, including AMC and Blackberry – to deliberately disrupt the market, and frustrate hedge fund managers.
"Hold the line AMC. Time to pile in before blast off!," wrote one on Reddit.
Months before the brazen intervention from small investors, AMC seemed "on the verge of collapse" explains CBS.
Not anymore.
Reddit's group WallStreetBets has delivered a huge punch to the stock market.
AMC’s shares were valued at under $2 at the start of 2021, before trading at about $20 after intervention by the Reddit community, after its investors noted stocks were being shorted by investment firms, writes i News in the UK.
The US Securities and Exchange Commission on Friday said it was "closely monitoring and evaluating the extreme price volatility of certain stocks," after the social media-fueled campaign sent shares of GameStop and AMC soaring.
"We will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws," the Wall Street regulator said, after some platforms this week restricted trades of the surging stocks.
The masses have been rebelling against one-percenters hoarding the world's wealth – and there's no sign they are slowing down.
US stock indexes had been set to open lower on Friday – partly over worries about the growing standoff between hedge funds and retail investors, reports Reuters.
Worries of a short squeeze – investors who have borrowed shares and must eventually pay them back – have grown as Reddit users are going after trading apps for restricting them.
This includes trading apps like Robinhood, which stopped buys on the suddenly popular stock of GameStop, Blackberry and AMC.
But determined Reddit warriors refused to be put off, and simply turned their attention to the trading apps getting in the way of the market manipulation.
Robinhood and Interactive Brokers said they planned to ease restrictions after imposing buying halts a day earlier.
So shares of companies including AMC, Blackberry and GameStop have risen again.
Sam Stovall, chief investment strategist at CFRA Research said on January 29: "The markets were vulnerable to a decline… and this Reddit activity was the catalyst that sort of triggered the sell-off."
Asked whether the system is 'rigged', Dave Portnoy, founder of Barstool Sports told CNN: "Yes, 100 per cent.
"There is no doubt in my mind that the system is rigged.
"I think if you ask most Americans [about Wall Street], they'll say yeah, it's a dirty game. This stinks."
Portnoy had previously tweeted Robinhood, telling the app's bosses that when Alexandria Ocasio-Cortez and Donald Trump Jr are on the same side over the 'rigged' system, "you know you f***ed up".
AOC had accused Wall Street of "treating our economy as a casino", while Trump Jr called Robinhood of being "mercenary".
What is short selling?
Kiplinger, publisher of business forecasts and personal finance advice, gives the following information on short selling:
"Short selling – or shorting – is placing a bet that a stock declines in value.
"To do this, you borrow shares from another investor and then sell them. Your broker does this for you behind the scenes.
"But remember: Those shares aren't yours to sell. You borrowed them.
This means you are obligated to buy the shares back so you can to return them to the original owner.
"This is where short squeezes come into play."
What are short squeezes?
Kiplinger explains that if "a short trade has become crowded, you have a lot of short sellers – all of whom have borrowed shares and all of whom must eventually pay them back.
"If something causes the stock to rise, it can quickly turn into a buying frenzy."
This is because "short sellers trip over one another to buy the shares so they can cut their losses and exit the trade.
"The higher the stock price goes, the more short sellers are forced to cut their losses by buying back the shares they sold.
"And their frantic buying drives the price even higher, forcing more short sellers to follow their lead.
"Panic-buying begets more panic-buying, egged on by speculators who know the situation the short sellers are in and actively try to put the screws to them.
"This is a short squeeze in action.
"And it's exactly what happened in the shares of Gamestop."
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