AMC Entertainment Holdings (AMC -2.01%) is having nearly as good a run as GameStop (GME 0.10%), with shares of the movie theater operator up 277% last week (compared to a 325% gain for GameStop). But one analyst says it's all going to end badly because AMC isn't worth more than $1 a share.

MKM Partners analyst Eric Handler downgraded its stock to sell from neutral today and set a price target of just a buck per share, some 92% lower than where it closed last Friday. However, the stock was up 6% as of 10:45 a.m. EST today.

Red curtain in an empty theater

Image source: Getty Images.

It's not surprising Wall Street has such a dour outlook on the world's biggest theater operator. The massive rise in AMC's stock is not based on the underlying fundamentals of its business, but rather a short squeeze designed to inflict the most pain possible on short-sellers.

Born of the same momentum that drove GameStop higher, traders on Reddit noticed the theater operator's stock was heavily shorted, meaning investors were betting the stock price would fall. At one point, some 80% of stock available for trading was sold short. Just as they did with the video game retailer, Reddit traders piled into the stock, buying shares and options contracts that forced the stock price higher, squeezing the shorts.

Brokerages responded by limiting or preventing investors from trading in these volatile issues, and while most bans on buying were reversed, the popular mobile trading platform Robinhood just announced it was imposing limits on the number of shares and options contracts investors could buy. 

While it is limiting GameStop investors to just one share and five contracts total, AMC traders can buy only 10 shares and 10 options contracts.

The theater chain raised nearly $1 billion in new financing last week, which should allow it to survive at least through 2021, also suggesting its stock might be worth more than $1 -- though perhaps not much more.