AMC Entertainment Holdings Inc. stock has been the talk of Wall Street lately as it continues to gain value thanks to retail investors across the country. This has been good news for AMC, as the company has been able to sell a large number of shares, recently netting $587 million from a sale.
The company had been close to bankruptcy in the middle of the pandemic, so the recent influx of interest in the stock has helped them recuperate tremendously. AMC is planning to sell even more shares in the future, with the potential to sell up to 25 million in 2022.
In the five days leading up to June 4th, retail investors put $345 million into AMC, which was a massive increase of 328% compared to its monthly average. As the stock price continued to increase, the company warned potential investors that buying the stock could result in losing their entire investment. Following this warning, the stock lost momentum and began to fall in price. However, it may not be long before it rises again thanks to these retail investors.
Retail Investors Fueling Surge
The recent surge of interest in stocks such as AMC can be attributed to the rise of retail investors gathering on social media and committing to a select few stocks. These investors previously made headlines earlier in the year, when they were responsible for pushing the Gamestop Corp. stock prices to vastly high levels. However, the fun these investors are having may not last for much longer.
While these investors have been pumping money into their unanimously chosen stocks for some time now, interest has started to fade as the process is no longer new and exciting. This disinterest will likely result in these stocks becoming far less volatile for potential investors. The possible returns may not be as large, but the chances of investors losing their entire investment thanks to extreme volatility will be much smaller.
Curious Buyers Beware
An investment in AMC Entertainment Holdings Inc. may seem like a good way to make money at the moment, but this investment could potentially come at a high cost. The stock has been very unpredictable as of late, and there is a good chance that any investment could prove to be a misguided one. Many of these retail investors are driven by the desire to “stick it to the man,” so to speak.
They do not invest based on the analysis of the current market, but instead on their desire to cause chaos in the market. Due to this style of investing, it’s hard to anticipate how the stock price will rise and fall. The same goes for other stocks that have been the target of retail investors as of late, including Blackberry and Gamestop Corp.
Many of these stocks seem to be companies that are currently in desperate financial situations; however, there really is no way to know for sure where these investors will go next.
Final Thoughts
The stock market can be an unforgiving wilderness. Situations such as the AMC surge and the Gamestop stock boom can seem like quick ways to make money for potential investors. While this can sometimes hold true, oftentimes investing in these stocks can lead to huge losses. Time will tell if the recent AMC surge is the end of the recent uptick in “meme” stocks or if it is a sign of things to come.
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