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Why AMC Entertainment Stock Soared Today

By Howard Smith - Feb 25, 2021 at 12:49PM

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The Reddit retail traders are driving moves in several stocks again.

What happened

The roller coaster ride continues for the stock of AMC Entertainment Holdings (AMC 2.95%) and other names influenced by Reddit retail traders. After the troubled theater operator's stock rocketed up at the end of January, the fury subsided, and shares dropped more than 70% from those highs. 

Trading volume spiked again today, and shares rose more than 20% before settling back to a gain of 14% as of 12:15 p.m. EST Thursday. 

So what

While there is no specific news on AMC today, the new round of buyers may have been sparked by news of the resignation of GameStop's (GME 11.54%) CFO. GameStop has been the higher-profile name caught up in the Reddit-influenced trading. Some investors may feel that they are playing a role influencing the businesses, but the reality of the stock's valuation should eventually come through. 

Stock chart with red arrow pointing down and green arrow pointing up.

Image source: Getty Images.

Now what

Even with the decline from the stock's highs, AMC shares are up about 370% year to date. Importantly for shareholders, though, its market capitalization is more than 600% higher since the start of 2021. That stems from the increased share count as the company raised much-needed capital while its business remained in limbo as theaters remain restricted or closed. 

Today's jump doesn't reflect what's happening with the underlying business. Investors would be better off following that rather than trying to game a trade around what the Reddit crowd is thinking.

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Stocks Mentioned

AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$12.23 (2.95%) $0.35
GameStop Corp. Stock Quote
GameStop Corp.
GME
$128.46 (11.54%) $13.29

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