By Ciara Linnane and Tomi Kilgore
The dynamic that has seemingly contributed to a short squeeze in the stock of videogame retailer GameStop Corp. also appears to be affecting shares in a host of other heavily shorted companies.
Shares of AMC Entertainment Holdings Inc. /zigman2/quotes/200235402/composite AMC +0.25% , BlackBerry Ltd. /zigman2/quotes/202784246/composite BB -3.96% , headphone maker Koss Corp. /zigman2/quotes/207340503/composite KOSS -3.40% and retailer Express Inc. /zigman2/quotes/210459169/composite EXPR -1.99% , have all experienced sharp moves without any apparent news to act as a driver while facing a large amount of bets against them. The same dynamic exists for GameStop /zigman2/quotes/203755179/composite GME +4.07% stock, which has skyrocketed more than 1,600% in the past two-plus weeks amid support from investors on Reddit’s WallStreetBets message board.
GameStop shares charged up 135% in morning trading Wednesday. The stock traded as high as $354.83 intraday, compared with the Jan. 12 closing price of $19.95.
In the case of AMC, the world’s biggest cinema operator, that has meant gains of more than 680% in the year to date, even as the company has conducted dilutive capital raisings and its core business remains greatly imperiled by the coronavirus pandemic. The crisis left most of AMC’s theaters in lockdown for months in 2020, deterred major studios from releasing new blockbusters and forced those theaters that were open to operate at limited capacity.
AMC’s stock blasted 224% higher in morning trading Wednesday, enough to make it the biggest gainer traded on major U.S. exchanges. With volume ballooning to 585.6 million shares, the stock was also the most actively traded.
On Monday, AMC announced it had raised $917 million in equity and debt to help it get through a coronavirus-impacted winter.
“Today, the sun is shining on AMC,” Chief Executive Adam Aron said in a statement. “After securing more than $1 billion of cash between April and November of 2020, through equity and debt raises along with a modest amount of asset sales, we are proud to announce today that over the past six weeks AMC has raised an additional $917 million capital infusion to bolster and solidify our liquidity and financial position. This means that any talk of an imminent bankruptcy for AMC is completely off the table.”
Mike O’Rourke, chief market strategist at Jones Trading, said one could argue that the Reddit’s WallStreetBets community has saved AMC from a pandemic-driven bankruptcy. The company conducted another at-the-market offering of 50 million shares Monday, he said.
“The company’s share count will be 337 million when that sale is completed, which is up from 58 million in October,” O’Rourke wrote in commentary. “The company’s market capitalization is nearly double what it was prior to the coronavirus.”
Like the other names caught up in this speculative frenzy, AMC has had a high level of short interest as a percentage of the float, which stood at about 69% according to latest data, although Monday’s share sales will take that percentage down.
“Management deserves credit for opportunistically taking advantage of the environment to gather the resources to stave off bankruptcy,” he wrote.
AMC did not respond to email and phone requests for comment. The Securities and Exchange Commission declined comment. Gamestop has not responded to a request for comment.
‘Investor stampede’ squeezes out bears
Shares of struggling retailer Express were among those caught up in the apparent short squeeze, according to Wedbush analyst Jen Redding.
The stock skyrocketed 190% on Wednesday, making it the third-biggest gainer on Wall Street, and putting it on track for the highest close since November 2018. Volume shot up to 120.2 million shares, compared with the full-day average of about 21.2 million shares over the past 30 days.