Why Is AMC Entertainment (AMC) Stock Up 20% Today?

Is the meme trade back? Investors in AMC Entertainment (NYSE:AMC) seem to think that’s the case as shares of AMC stock rocket higher in today’s session.

The movie theater operator surged more than 20% intraday on little news. This move higher appears to be tied to a speculative momentum-driven rally, just a day after comments from Federal Reserve Chairman Jerome Powell suggested the pace of rate hikes could slow.

Notably, this move today also included trading halts for AMC stock in today’s session. Some experts are linking these trading halts to a significant surge in options activity, with short covering likely driving much of this rally today.

As with last year’s parabolic surge, it appears short squeeze enthusiasts are back. There’s something about historical rallies ending Q4 and heading into Q1 that has retail investors excited. Thus, perhaps we’re set up for another high-volatility period with such stocks.

Let’s dive into what investors should make of this move today.

What’s Going on With AMC Stock Today?

With little to go on in terms of real news flow, this move is clearly the latest example of speculative mania remaining in the system. Fundamentally, AMC stock is on precarious footing. This is a company that’s still heavily indebted, isn’t profitable and seeing revenue numbers that are still below pre-pandemic levels. Many in the bond market appear to be taking the view this company may not make it out of this mess.

If we are indeed headed into a recession, AMC stock is to be avoided. That said, it’s clear AMC has an ardent following of retail investors looking to jump on any reason to get bullish. Lately, discussion around a potential Fed pivot appears to be the spark speculators needed.

Other high-profile meme stocks that surged early last year are also seeing spikes today. Accordingly, AMC stock and its meme peers will be interesting to watch over the next few trading sessions.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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