Okay – I’ve put this quick post together for the friends of mine who I’ve told about AMC Entertainment stock. This is what I believe we will see in the next few weeks.
AMC is not some super great business or the greatest stock on earth. That really was never the case – the real play is what’s going on behind the stock.
The hedge funds (a bunch of billionaires) borrowed 30 million shares on a “short sale” they loaned from AMC, they sell them, make commission and interest and as soon as the stock falls people sell them and they give them back to AMC. This is where it gets funky – the Internet caught on to the short sell and basically bought all those “loaned” shares. So in essence if we don’t sell them – they can’t buy them back. If they can’t buy them back they have to pay AMC tons in interest. These huge interest payments on millions of stock will make AMC worth more and more and the shares worth more and more. As long as we hold the stock – in theory the price should rise.
From my readings we should see this within the next week or so where Citadel (the main hedge fund) will have to begin paying their margins on the shorted stocks. Go to www.reddit.com and read about it. I think the stock will jump fast and big….normally at the top would be the time to jump out…in this circumstance… i’m not sure if that will be the case. I think the hedge funds – the market masterminds will have a huge jump in stock and then try to get it to fall…making everyone think it’s going back to $3 and try and get everyone to sell it. It will be hard not to if it goes to $100 a share not to sell it…..BUT REMEBER…they need you/us to sell it to buy it back. I implore you all to make wise decisions. Some of you bought a few shares, some of you bought 20 and some 100. If you want to take a profit and get out – do it while the stock is high. If you’re in it to see how far and how high this can actually go….stay in. Some say it could reach $1000 per share and even higher. Make your own mind up. I know I mentioned this to a lot of you – I don’t want responsibilities in telling anyone to stay in or get out or what you should do. Read up on it, do your own diligence and I hope we all make bank on this.
This is not financial advice and I am not a financial advisor – I eat crayons.