What happened

Shares of Sundial Growers (NASDAQ:SNDL), Clover Health (NASDAQ:CLOV), and AMC Holdings (NYSE:AMC) are getting hit hard in Thursday trading. They were down by 7%, 11.3%, and 11.2%, respectively, as of 1:50 p.m. EDT. But is this just a meme stock sell-off, or is there something more substantial behind the selling?

In the case of at least two of these stocks, there is.

3 red arrows going down and crashing through the floor

Image source: Getty Images.

So what

Regarding the movie theater giant, in fact, there seem to be a few things going on. First off, AMC announced Wednesday night that it had a new, updated share count to report. As of June 2, says the company, it now has 501.8 million shares outstanding, of which more than 80% are owned by some 4.1 million individual retail investors.  

AMC management seems to be spinning this news as a sort of "we are a Volks-stock" story -- an investment for the average Joe. But if you read the fine print, what it really means is that since February 2020, AMC has had to issue and sell nearly 400 million new shares to keep itself afloat, ballooning its share count to nearly 5 times its previous size -- and diminishing shareholders' claim on any future profits. (Oh, and management want to sell even more shares).

Could this be the reason why three company insiders unloaded nearly 89,000 shares of AMC stock on the market last week, as Barrons just reported they did? Maybe.  

And speaking of selling, Bank of America just downgraded Clover Health shares to underperform (i.e., sell) Thursday morning. Although the bank's analyst admitted that Clover "provides value and helps reduce costs," notes TheFly.com, the stock's recent surge in price, viewed alongside lowered targets for Medicare Advantage growth, has put it a risky valuation. Shares were trading hands for around $15 Thursday afternoon. Bank of America still thinks Clover Health is worth no more than $10 a share.

Now what

In short, at least for AMC and Clover Health, there do appear to be substantive catalysts behind Thursday's share price declines. There doesn't seem to be any particularly bad news floating around about Sundial Growers, however -- other than the fact that it has never earned a profit, that its sales fell 20% last quarter, and that the stock trades at 17.7 times sales, none of which is a recent revelation.

If you can ignore all that, though, then yeah, I suppose you could just call all of this a "meme stock sell-off."

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.