Why AMC Stock Is Rocketing Higher Today
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
The movie theater stock is red hot again, two weeks after its surprise mining investment.
What happened
Is this the mother of all short squeezes that AMC Entertainment ( AMC 44.91% ) investors have been waiting for?
After another week of a rapidly rising stock price, shares of AMC were soaring 22.2% at 11:30 a.m. EST on Monday. The stock has now nearly doubled in just two weeks, and it has to be putting pressure on short-sellers, many of whom are likely moving to cover their positions.
Image source: Getty Images.
So what
AMC remains a highly shorted stock, with more than 20% of its shares outstanding sold short. What many of those traders didn't expect was for the movie theater operator to zig when they anticipated a zag. The announcement that AMC was buying a stake in a gold and silver miner threw conventional wisdom out the window and sent its stock off to the races.
Peter Lynch had a word for when companies went astray and acquired businesses far outside their circle of competence: de-worsi-fication. Precious metals mining has nothing to do with operating a movie house, but Hycroft Mining ( HYMC 81.25% ) was similar to AMC in one way: It was a cash-strapped business unable to raise money despite having potential for growth.
That was where AMC found itself when hedge funds were betting against it, and small retail investors rallied around the stock and have helped keep shares afloat. Now there might be no containing them if a short squeeze is at hand.
Now what
This isn't over. CEO Adam Aron says based on the reception his deal for Hycroft received, he's going to look for more "transformational" deals on which to spend his $1.8 billion war chest.
That likely helped spark this morning's rally, but whether turning AMC Entertainment into a conglomerate operating in disparate industries ultimately benefits movie theater investors in the long term remains to be seen.
Should you invest $1,000 in AMC Entertainment Holdings, Inc. right now?
Before you consider AMC Entertainment Holdings, Inc., you'll want to hear this.
Our award-winning analyst team just revealed what they believe are the 10 best stocks for investors to buy right now... and AMC Entertainment Holdings, Inc. wasn't one of them.
The online investing service they've run for two decades, Motley Fool Stock Advisor, has beaten the stock market by 4X.* And right now, they think there are 10 stocks that are better buys.
See the 10 stocks
*Stock Advisor returns as of March 3, 2022
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share!
You can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.
Click here to learn more.
Learn more
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
The movie theater stock is red hot again, two weeks after its surprise mining investment.
What happened
Is this the mother of all short squeezes that AMC Entertainment ( AMC 44.91% ) investors have been waiting for?
After another week of a rapidly rising stock price, shares of AMC were soaring 22.2% at 11:30 a.m. EST on Monday. The stock has now nearly doubled in just two weeks, and it has to be putting pressure on short-sellers, many of whom are likely moving to cover their positions.
Image source: Getty Images.
So what
AMC remains a highly shorted stock, with more than 20% of its shares outstanding sold short. What many of those traders didn't expect was for the movie theater operator to zig when they anticipated a zag. The announcement that AMC was buying a stake in a gold and silver miner threw conventional wisdom out the window and sent its stock off to the races.
Peter Lynch had a word for when companies went astray and acquired businesses far outside their circle of competence: de-worsi-fication. Precious metals mining has nothing to do with operating a movie house, but Hycroft Mining ( HYMC 81.25% ) was similar to AMC in one way: It was a cash-strapped business unable to raise money despite having potential for growth.
That was where AMC found itself when hedge funds were betting against it, and small retail investors rallied around the stock and have helped keep shares afloat. Now there might be no containing them if a short squeeze is at hand.
Now what
This isn't over. CEO Adam Aron says based on the reception his deal for Hycroft received, he's going to look for more "transformational" deals on which to spend his $1.8 billion war chest.
That likely helped spark this morning's rally, but whether turning AMC Entertainment into a conglomerate operating in disparate industries ultimately benefits movie theater investors in the long term remains to be seen.
Should you invest $1,000 in AMC Entertainment Holdings, Inc. right now?
Before you consider AMC Entertainment Holdings, Inc., you'll want to hear this.
Our award-winning analyst team just revealed what they believe are the 10 best stocks for investors to buy right now... and AMC Entertainment Holdings, Inc. wasn't one of them.
The online investing service they've run for two decades, Motley Fool Stock Advisor, has beaten the stock market by 4X.* And right now, they think there are 10 stocks that are better buys.
See the 10 stocks
*Stock Advisor returns as of March 3, 2022
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true.
And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share!
You can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.
Click here to learn more.
Learn more
Comments
Post a Comment