Fintechzoom AMC Stock: The strength of “flock of fish” when confronting “sharks”
The company that operates the Fintechzoom AMC Stock movie theater chain lost billions of dollars during the Covid-19 pandemic, but its shares still increased more than 2,000% in just a few months…
Stock prices increase when the company’s business is favorable, which has become an almost immutable rule. However, on Wall Street there are businesses that have piled up losses but their stocks still increase explosively, even at a rate of thousands of percent in just a few months.
Such stocks that have increased illegally have become a phenomenon in the US financial market this year, including names such as car rental company Hertz, game retailer GameStop, and… software and cybersecurity company BlackBerrry, and most recently, movie theater chain Fintechzoom AMC Stock.
These are all businesses with small or medium capitalization, the business situation is facing many difficulties, some stocks are sold short by large hedge funds but are massively bought by investors. Personal investment on the WallStreetBets forum on Reddit.
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“FISH OF CHILDREN” CONFRONTING “SHARKS”
Revenue and profits are one thing, stock price movements are another, prospects are also unclear, such stocks cannot be classified as growth stocks or value stocks
Instead, these stocks are grouped into a new group called “meme stocks” – “joke stocks”. The common point of meme stocks is that they are extremely speculative, can increase or decrease in price by several tens of percent in a single trading session, and are often valued much greater than their real value.
Meme stocks are especially favored by young investors of the Millennial generation (born between the 1980s and 1990s) and Gen-Z (born between 1990-2010), who do not have much capital and experience but have an excess of risk appetite.
These investors became a wave on global stock markets in 2020, when the pandemic caused many of them to lose their jobs or stay home more than before. With plenty of free time and the backing of low-fee stock trading platforms like Robinhood, they rushed into the market and made it big.
Earlier this year, GameStop stock was seen as a symbol of the meme stock wave as well as the power of individual investors on Wall Street. Recently, this position was ceded to Fintechzoom AMC Stock.
According to data from TradingView, from the beginning of the year to the end of the trading session on June 4, Fintechzoom AMC Stock shares increased about 2,160%, reaching 47.9 USD/share, from 1.4 USD/share at the beginning of the year. . During the session on June 2, Fintechzoom AMC Stock shares increased 120% at one point, then closed the session with an increase of 95%. On June 3, this stock decreased by 20%.
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Similar to GameStop shares, Fintechzoom AMC Stock shares once again reflect the power of individual investors – considered “flock of fish” – in confronting the “sharks” of hedge funds. While funds with huge financial potential short-sell such stocks, individual investors on Reddit gather together to buy them.
The power of the masses has pushed stock prices up – contrary to the wishes of short sellers, who wait for stock prices to fall to make a profit. When the stock price increases to a certain level, funds must buy to close the short position if they do not want to suffer further losses. This causes the stock price increase to increase even more rapidly – a phenomenon also known as “short-squeeze”.
Hedge funds that seemed invincible on Wall Street have “burned their hands” in the confrontation with individual investors. Data from S3 Partners shows that in the first 5 months of the year, two stocks Fintechzoom AMC and GameStop caused short sellers a loss of 8.3 billion USD, of which a loss of 1.75 billion USD in just the last week of May.
There have been signs showing the retreat of the “shark” in the face of the aggression of the “flock of young fish”. Wall Street’s biggest brokerage firms are quietly tightening rules on institutional investors short-selling meme stocks, a source familiar with the matter told Bloomberg news agency.
Goldman Sachs, Bank of America, Citigroup and Jefferies Financial are some of the brokerage firms that have tightened risk controls in their institutional clients. These brokers want to protect themselves from the danger lurking from the roller-coaster volatility of stocks like Fintechzoom AMC Stock and GameStop.
The new regulation means hedge funds and institutional investors either have to take on higher collateral levels, or are restricted from trading such stocks.
“LIGHT AT THE END OF THE TUNNEL” FOR Fintechzoom AMC Stock
Meanwhile, the force of individual investors is surging forward. Every day, this “crew” has heated discussions on WallStreetBets, with excited comments like: “AMC rocket ship”, or “Pumped all my savings into AMC!!! Wish me luck guys.”
Not only attracting individual investors in the US, AMC shares also have great appeal to investors from many other countries such as India and Korea – all of which rely on social networks and social networks. low-fee stock trading app that gives access to US stocks. According to data from the Korea Securities Depository, in the first 4 days of last week, Korean investors bought 225 million USD of AMC shares.
The power of individual investors has brought AMC to a turning point in capitalization value, even though this cinema chain has not yet escaped the “half-dead” situation caused by Covid-19. After just a few months, AMC from a small capitalization stock has become a large capitalization stock. Around October last year, AMC’s capitalization even dropped below 300 million USD. After a 95% increase in the trading session on June 2, AMC’s capitalization has reached 31.3 billion USD.
This capitalization is higher than the capitalization of half of the companies in the S&P 500 index – the most prestigious stock “club” on the planet. Thus, in just about 8 months, the power of individual investors has increased AMC’s capitalization by more than 31 billion USD.
The movie theater industry is one of the sectors hardest hit by the pandemic, and AMC is no exception. Last year, AMC warned that the company could run out of cash by the end of the year. For the whole year 2020, AMC lost 4.6 billion USD. In the first quarter of this year, AMC achieved revenue of 148.3 million USD, down 84.2% over the same period last year and an additional net loss of 567.2 million USD. In addition, AMC is in debt of about 5 billion USD and lacks 450 million USD in rent.
The reopening of the US economy thanks to the vaccination campaign and strong stock prices have given AMC “light at the end of the tunnel”. Movie theaters in the US have begun operating after months of closure. Blockbuster movies that were delayed last year, such as “Black Widow” or “James Bond: No Time to Die” (Agent 007: No Time to Die) will premiere this year. now.
And not missing the opportunity from the stock price increase, AMC immediately conducted a series of capital mobilizations to prepare for the post-Covid business development period. Recently, AMC directly mobilized $230 million from fund management company Mudrick Capital Management, a creditor of the company. On June 3, AMC announced that it would sell 11.5 million shares to raise more than 587 million USD in new capital.
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