AMC Leads Another Round of Meme Stocks’ Wild Ride

AMC Leads Another Round of Meme Stocks’ Wild Ride

 Published: June 7th, 2021

 As if replaying the Reddit-fueled buying rage witnessed in late January, shares of GameStop Corp., AMC Entertainment Holdings Inc., and other equities popular with individual investors see-sawed markedly on Friday, June 4. The trend propelled meme stocks higher once more even though the rest of the market was running in place.

On Friday, June 4, the shares of GameStop Corp., AMC Entertainment Holdings Inc., and other stocks preferred by individual investors fluctuated substantially, indicating that meme stocks are once again on the move.

While the larger market seemed to run in place, the mentioned stocks rose as they have over the past ten days. The furious rally is similar to the Reddit-fueled trade in January. AMC shares became a favorite among investors who have converged on social media to push the stocks higher.

The stock plummeted 6.7% but overall held on to a monumental 83% gain week-on-week. The weekly surge has improved the stock’s gain since the year began to more than 2,100%. Besides, its daily average trading volume has more than tripled this past week against the 2021 average.

Meanwhile, the other stocks remained largely unmoved. The S&P 500 index was undecided in a narrow range as investors analyzed inflation signals and labor market data, hoping it might inform the Federal Reserve’s next move.

The benchmark climbed 0.9% after the monthly jobs information indicated that employers added 559,000 jobs in May. Once again, the employment figures fell short of economists’ predictions. This factor could inform the Fed against hastening its timeline for cutting back on asset purchase or raising the base lending rate.

Disturbing Stability

Friday, June 4, marked the 10th back-to-back day the S&P 500 index closed with a move of less than 1%. It is the longest such streak since late April, according to Dow Jones Market Data. Overall, AMC doubled its share price to get to an all-time high. However, it is not only AMC shares that rose wildly; Bed Bath & Beyond rose 63%, while BlackBerry and GameStop surged 32% and 13%, respectively.

The four companies led the ten most traded stocks on Nasdaq and NYSE on Thursday, June 3. AMC led the race with 766 million shares changing hands, about 1.7 times its outstanding shares and seven times more than its shares traded during the previous session.

The turnover almost hit $45 billion, three times more than Tesla. Meme stock is a term investors have coined for publicly traded companies that have seen their share price and trading volumes surge not on account of the performance; rather because of the exposure on online forums such as Reddit.

AMC’s wild ride got an impetus after the company announced that it would give away free large popcorn to every investor during the first movie they would watch in the company’s U.S. theatres this summer.

Soon after the announcement, AMC shares surged more than 30% just after opening, surpassing the $40 ceiling for the first time since the company’s listing on NYSE.

Rally Like No Other

AMC’s rally did not stop with the surge after the popcorn announcement. The traders’ enthusiasm pushed the shares past $50, $60, and then $70. The sustained rally stopped just beneath $73, about 126% above the previous session’s price and almost 40 times more than the stock’s price in January before the meme stock frenzy began.

The movement of meme stocks has not matched the January euphoria. The almost 770 million shares traded on Thursday, June 3, are only a fraction of the 1.25 billion shares traded in one day during the earlier mania that peaked on January 27. However, it is still far ahead of the company’s daily average of 161.7 million shares a day.

AMC is now the third most zealously-traded stock in the U.S. market this year. It has been outstripped only by Sundial Growers Inc., an entity in the cannabis industry, and Naked Brands Group Ltd., a company specializing in intimate apparel. Individual investors also prefer the two.

Sundial Growers and Naked Brands were up 33% for much of last week to Thursday, June 3. The gains solidified the previous week’s figures, which were double-digit increases.

GameStop, the Reddit crowd’s favorite stock, was up 16% in the week that ended on Saturday, June 5, an extension of the previous week’s 26% rally. The shares, which have surged almost 1,300% this year, rose as high as $483 during intraday trading in January before plummeting to $40 in February.

Meme Stock Movements Shift the Focus on Social Media Investors

On Thursday, June 3, GameStop closed at $258.18. However, it slipped 2% the following day. Meanwhile, the frenzy has shifted the attention to an emerging group of investors.

The said investors rely on and share trading information on TikTok, YouTube, Reddit, and other social media platforms. While AMC led the day’s proceedings on the stock exchange, two meme stocks took charge of the proceedings on social media. BlackBerry emerged as the most discussed stock, increasing by 32%, with the traded volume rising by 22 times compared to the previous day.

Bed Bath & Beyond recorded the steepest increase in social media mentions. The social media volume indicator pointed to a 23 times increase in interest compared to one month ago. According to data provided by HypeEquity, shares of the Canadian enterprise software manufacturing multinational shot up 62% on Wednesday, June 2, increasing the trading volume by more than 25 times compared to the daily average.

The two sustained rallies have increased the companies’ capitalization. AMC is now worth more than $28 billion, some five times more than its 2019 revenues. These figures are despite the $449 million drop in revenue and losses of more than $3 billion.

While the company hopes its financials will improve this year as the economy wholly reopens, most analysts hardly believe the figures will outstrip the 2018/19 results.

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