Shares of AMC Entertainment are down nearly 40% today on another wild ride, reversing gains after an explosion of support by retail traders that started last week catapulted stock of the pandemic-pummeled chain to levels not seen since 2017.
Around midday, shares of the nation’s largest cinema operator are changing hands at $8.21 That’s still a few bucks up from where it landed after announcing good news on Jan. 25 — a raise of $713 million in fresh financing, enough cash to make it through 2021 and the worst of the coronavirus. That was heartening after warnings in December that AMC would be out of cash in January if it couldn’t raise more funds, prompting fears of bankruptcy that had knocked shares to a low of $1.91.
GameStop is down 50% at $114.
In what’s been called a populist revolution on Wall Street, retail traders (meaning individuals) gathered on Reddit chat rooms to spark a collective buying spree of AMC, GameStop and a handful of other stocks, mostly businesses under pressure. The price hikes were painful for big Wall investors with large short positions – meaning they had bet the stocks would fall, not rise. AMC surged past $20 and GameStop gained 1,600% before popular online platforms like Robinhood restricted trading in the most volatile stocks. The phenomenon is already the subject of two separate Hollywood projects.
Billionaire entrepreneur and Dallas Mavericks owner Mark Cuban popped up on Reddit’s WallStreetBets (WSB) chat room Tuesday for an “Ask Me Anything” session where he said the stocks were falling because “the source of demand has been crippled. When RH shut it down, then cut it back, let’s put aside why, they cut of the greatest source of demand. They created a RobinHood Dive. No RH buyers, means sellers lower their price to find buyers. And they keep on lowering it till they find buyers. Keep the most natural buyers out of the market and the price keeps on FALLING.”
Referring mainly to GameStop, the Shark Tank star said: “If you can afford to hold the stock, you hold. I dont own it, but thats what i would do. Why? because when RH and the other online brokers open it back up to buyers, then we will see what WSB is really made of. That is when you get to make it all work. I have no doubt that there are funds and big players that have shorted this stock again thinking they are smarter than everyone on WSB. I know you are going to hate to hear this, but the lower it goes, the more powerful WSB can be stepping up to buy the stock again.”
Or, as one WSB poster put it — a bit more aggressively: “My fellow autists, these past 2 days have been our toughest battles we have faced, these days of bleeding WERE EXPECTED, the time is now to rise up from the ashes and hold your shares like your life depends on it. WE MUST LOOK FAILURE IN THE EYE AND SAY F-CK YOU AND BUY MORE GME AND AMC. While we are all panicking, the suits are winning, but it’s far from over. We must unite and stand tall, BUY AND HOLD. WHEN WE BLEED, THEY BLEED AS WELL.”
Another Reddit subgroup, called Stocks, urged members “to take care of this sub” as WallStreetBets grows too chaotic.
“As you guys may know the state of wsb is not great at the moment, and we should be seeing alot of people coming from there to here, I would like to say if you’re new this place is not wsb, this is a place for legitimate dd and discussions. We have to preserve this sub because as far as I’m concerned it’s all we have left, r/investing [another subgroup] is fine but it’s slowly becoming a ghost town, and wsb is in utter chaos so this is the last we have so we better take care of it,” read a post.