We've seen a lot of meme stock madness in 2021. Even by this year's crazed standards, however, last week's action in US cinema chain AMC really was a sight to behold.
At the start of 2021, AMC was facing bankruptcy and the stock was trading around $2. Last week, it topped $70 and almost doubled on Wednesday alone.
On Tuesday, AMC warned investors its market capitalisation was significantly higher than pre-pandemic levels and current valuations reflected "trading dynamics unrelated to our financial performance or prospects". On the same day, it announced it sold 8.5 million shares to hedge fund Mudrick Capital, which then reportedly flipped all this stock for a quick profit on the very same day.
In normal times, stocks plunge on news like this. They’re certainly not meant to double.
The median analyst price target for AMC is $3.70, but that doesn’t matter right now – not when you can reward small investors by giving them free popcorn (yes, really).
It’s absolutely bananas.
Morgan Housel of the Collaborative Fund puts it well. "AMC is now worth more than ... ah, who are we kidding, none of this matters anymore."