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AMC movie theater

Angela Weiss / AFP via Getty Images

After a lackluster month for shares of

AMC Entertainment Holdings

and

GameStop,

both roared higher on Tuesday, burning short sellers along the way.

On Tuesday,

AMC Entertainment

stock (ticker: AMC) surged 24% to $43.09 while

GameStop

stock (GME) closed up 10% to $191.18. Both posted their highest close since July 9. GameStop stock is still down 10.7% month-to-date, while AMC stock is down 24% in July, according to Dow Jones Market Data.

AMC and GameStop are the two major meme stocks—meaning their daily price movements are often unpredictable, having more to do with factors like social media chatter, options and momentum trading quirks, and short seller activity. Several analysts have dropped coverage on GameStop, arguing it no longer trades based on fundamentals.

Ihor Dusaniwsky,
managing director at short-selling data provider S3 Partners, told Barron’s he estimates 75.8 million AMC shares are sold short, or roughly 15% of shares available for trading. There has been some covering, as he estimates shares shorted are down by about 4 million over the last week. But with the stock up $8.47 on Tuesday, short sellers were down $642 million in mark-to-market losses on Tuesday alone, bringing the year-to-date losses to $3.82 billion.

For GameStop, he estimates about 7.9 million shares shorted, or 14% of shares available for trading, down by about a million shares over the last week. Based on those numbers, short sellers were down $139.8 million on Tuesday, bringing year-to-date losses to $6.32 billion.

AMC did give investors some news to chew on. After the close on Monday, the company said it was adding two former Pacific Theatres locations in the Los Angeles area. It also said it’s in discussions with other property owners regarding adding more closed locations. Consolidation would be good for AMC, but it would take bold assumptions to justify the stock’s current levels.

There was no such news for GameStop to justify the move—though late Monday night chairman
Ryan Cohen
posted a photo of himself with chopsticks in his nose with the caption “PG-13.” Reddit users for months have speculated wildly based on every emoji, GIF, and photo that the Chewy co-founder has shared on Twitter.

What comes next for the meme stocks is anyone’s guess. Wall Street pros have been calling for a crash for months, but meme stocks have held up, albeit with plenty of volatility along the way. Eventually the companies will need to put their cash to work and justify these elevated valuations. Just not yet, apparently.

Write to Connor Smith at connor.smith@barrons.com

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