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The AMC Town Square 18 cinema in Las Vegas serves popcorn.
Getty Images/Ethan Miller
AMC Entertainment Holdings is a company that produces movies.
and
GameStop
Shortly before noon, the stock price reversed. Prior to the rebound, the two biggest meme stocks were on track to drop for the fifth trading day in a row. In recent trade, AMC (ticker: AMC) was up 4% to $46.88.
GameStop
(GME) was trading at $191.30, up 0.3 percent. The
The S&P 500 index
was down 0.8 percent on the day.
If Thursday’s changes hold, it will end both companies’ greatest losing streak since May, when AMC fell for eight consecutive trading days, ending on May 6, and GameStop fell for five consecutive trading days, finishing on May 5. According to Dow Jones Market Data, both stocks had lower-than-average daily volume during the 10-day period ending on Wednesday compared to the rest of the year. AMC dominated the small-cap universe throughout the first half of the year, skewing the market.
Russell 2000 is a company founded in the year 2000
index, Wells Fargo Securities’ head of equities strategy, Christopher Harvey, wrote in a note on Thursday. Because of AMC, long-only small- and mid-cap managers who weigh companies according on fundamental factors trailed the Russell 2000. He also pointed out that small-cap quantitative funds were hampered by their lower portfolio skew due to AMC. Funds that underweighted AMC, on the other hand, will benefit from the current decrease.
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Due to high levels of short selling, Reddit members attacked AMC and GameStop in January. The equities rose as a result of a trading frenzy fueled by a combination of factors such as momentum trading, high options volume, and viral social media talk. In late May, both firms’ stock prices soared once more. The trading anomalies have persisted, prompting some analysts who cover firms based on basic reasons such as expected cash flow rather than short-squeeze hopes to drop these stocks entirely from their coverage. Apart from the erratic trading, analysts claimed their biggest clientele, institutional investors, were uninterested in research on these companies. Michael Burry, the “Big Short” investor who bet on GameStop in 2019, previously told Barron’s that he believes GameStop and other meme stocks will fail, putting normal investors at risk. In the weeks preceding up to their recent downturn, they generally traded sideways. AMC canceled a plan to seek shareholders to vote on the authorization of 25 million new shares earlier this week. If permitted, the corporation may have begun selling additional shares in 2022 in order to acquire funds for debt reduction and acquisitions. Since posting fiscal first-quarter data on June 9, GameStop’s stock has been on the slide. Connor Smith can be reached at connor.smith@barrons.com./n
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