What happened

AMC Entertainment Holdings' (AMC -2.01%) management has been engaging with retail traders on social media. It's trying to take advantage of the newfound popularity as a meme stock to raise capital to help the underlying business. But the stock has been dropping over recent days, including an almost 7% drop during Friday's session. Shares have pared those losses, but remain down about 5% as of 2:30 p.m. EDT. 

So what

As the discussion about AMC continued to gain steam on Reddit's WallStreetBets forum, AMC CEO Adam Aron began a strategy of embracing the retail shareholders, which Aron said now make up more than 80% of the company's shareholders. This seems to have reenergized the group, driving shares up almost 300% in the last month. It also seems to have helped drive short-sellers out, forcing some to cover their positions. In that month's time, AMC shares sold short dropped from more than 22% of total outstanding shares to less than 17%, according to data from YCharts. 

Two people walking back into movie theater from concession stand.

Image source: Getty Images.

Now what

Earlier this month, AMC announced a new platform called AMC Investor Connect meant to attract more of the retail traders into the company's theaters. AMC aims to use the new platform to help communicate with the retail shareholder base, offering things like free popcorn and special movie screenings. 

Aron then went on social media asking shareholders to approve another 25 million shares to be available for sale. Voting began June 16 and results will be announced at the company's shareholder meeting in late July. Aron hopes the engagement will give the company more support to continue to raise capital with its share price elevated from the social media movement. 

With short-sellers already covering, the force of a short squeeze is lessening. Share weakness over the past few days, including today, may be reflecting that.