Published - August 9, 2022 @ 15:19 PM (EET)
As meme stocks came back into vogue by retail investors, spurred by the market's growing optimism, shares of AMC Entertainment Holdings (NYSE:AMC) climbed on Monday, on pace to complete a six-day winning streak.
Trying to execute a short squeeze, hundreds of traders on Reddit's WallStreetBets touted their bets on AMC in a push to bring the stock back to highs seen during the coronavirus pandemic.
The rally started last Thursday after the movie-theater company announced it was issuing a special dividend of Preferred Equity Units, which will be issued to AMC common shareholders on the dividend date of 19 August and will trade under the ticker 'APE' from 22 August.
The ticker is a symbol of the backers of the meme stock who call themselves "apes" or "ape nation," further establishing the stock's meme status.
AMC shares climbed more than 15% on Monday, extending its previous winning streak, and exploded to their highest level since April before seeing a retracement to settle at $23.90 Monday.
While a basket of meme stocks tracked by Bloomberg rose 3.7%, extending a six-day rally of its own, senior market strategist Ed Moya at Oanda says,
"these meme stock rallies that are emerging will only last if US stocks broadly continue to head higher."
Since the frenzy took off in 2021, meme stock trading had cooled as retail investors turned bearish and took a step back from the markets.
But markets are starting to turn, and short covering from institutional investors may have boosted the recent surge, according to some on Wall Street.
The announcement of AMC preferred equity units further overshadowed the company's reported second-quarter earnings last Thursday, which were in line with estimates.
Revenue jumped 162% to $1.17 billion as it recovered from the pandemic, yet the company still lost money on a free cash flow basis and under generally accepted accounting principles (GAAP).
Turning to Wall Street, analysts continue to be cautious about meme stocks. 62% of analysts rate AMC a sell, while 38% rate it a Hold.
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