Strange financial news continues to come out of the stock market, due to an ongoing battle between big market players and individual traders on Reddit. While the stock price of AMC has been up and down because of the company's financial struggles, their stock price got a sudden boost of nearly 300% when markets opened, but not necessarily because the company itself did anything noteworthy.
Some may have heard of something similar occurring with Gamestop's current stock price, which has been inflating far beyond the value some would expect. The situation is complicated, but it boils down to this: big stock market players and hedge funds were betting big that Gamestop's stock would go down in value, but several investment communities, particularly on Reddit, noticed this, and decided to bet in the other direction, purchasing large quantities of stock in the hopes that the value would go up.
When all these purchases started to drive the stock price up, suddenly these hedge funds who were betting against the stock stood to lose a lot of money. This encouraged some of them to start buying their stock back as well, pushing the price up further, and creating a feedback loop where both sides continued to purchase more and more stock at higher and higher prices. This is all expected to reach a tipping point where the biggest players will be forced to fold, resulting in one last big bump in value, followed by a crash as the stock normalizes to a more realistic value.
Those traders are already looking for the next big-ticket item, however. Before this all occurred, rumors were circulating that the next stock under the crosshairs was AMC, as hedge funds expected it to continue to drop in value. So some traders are already trying to make lightning strike twice by purchasing up AMC stock before the dust has settled on Gamestop.
It's a somewhat unprecedented situation, with the trading community on Reddit motivated both by the unexpected windfall, and a desire to beat out the big players at the top of the game. Though AMC has had some evidence of an upswing, the current stock price is largely due to factors beyond its control, and may be volatile as the market continues to react.
Predicting a situation like this is incredibly difficult, as too much is happening all at once, with no solid historical examples to pull from. AMC's stock could continue to rise exponentially in much the same way Gamestop's did, or perhaps the market will adjust to this new tactic and normalize relatively quickly. Whatever comes next for AMC Entertainment's stock, it will certainly be a story to keep an eye on as things continue to develop.
Source: The Hollywood Reporter