Shares of AMC Entertainment Holdings (NYSE:AMC) were moving higher today as meme stocks rallied again, although there was no news about the movie theater operator.
Nonetheless, AMC bulls on social media were cheering the stock higher, calling for another short squeeze.
As of noon EDT on Thursday, the stock was up 14.1% on its highest volume in over a month. At the same time, GameStop, another popular meme stock, had gained 4.7%.
There was no clear reason for the surge in AMC, which has been highly volatile since it became a target of traders on Reddit's WallStreetBets board in January.
One possible explanation was the exodus out of popular cryptocurrencies including Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) last night after Tesla (NASDAQ: TSLA) CEO Elon Musk said that the electric car company would stop accepting Bitcoin over environmental concerns. All three of those cryptos fell by double digits.
Since AMC stock has also been popular with day traders and trades similarly to cryptocurrencies, some of those traders may have rotated out of cryptocurrency and into AMC.
The movie theater operator also reported earnings last week, though the stock had been mostly quiet since then. First-quarter revenue was down 84.2% to $148.3 million as the company has been hit badly by the pandemic, and its adjusted loss per share narrowed from $2.22 to $1.42.
Almost all AMC theaters have reopened in the U.S., and capacity is gradually ramping up as the pandemic eases and vaccinations spread.
AMC stock has defied fundamentals for several months now as bulls seem to be banking on pent-up demand driving the stock's recovery, but there are a number of reasons it's best avoided. Share dilution surged during the pandemic with shares outstanding growing from 100 million to 400 million, meaning it will be difficult for the company to generate a meaningful profit. It also has $5.5 billion in debt, much of which carries high interest. Meanwhile, pressure from streaming will remain even after the initial wave of pent-up demand for going to the movies fades.
For now, meme traders seem set to sustain AMC at its current levels, but the company's business prospects don't warrant a share price around $12.