What happened
Shares of movie theater chain AMC Entertainment Holdings (AMC -3.25%) are lower by 9.8% on Friday afternoon in response to Iceberg Research's disclosure of a short position in the ever-contentious stock.
So what
AMC Entertainment is of course the king of the so-called meme stocks, pushed sharply higher earlier as part of a coordinated buying effort from retail traders. Those plans worked, but perhaps too well. Up more than 3,000% from January's low at one point last month, shares have been left vulnerable to profit-takers and short-sellers, traders betting that a stock will lose value.
Image source: Getty Images.
Iceberg Research has publicized such a short position in AMC Entertainment Holdings. In a tweet posted early Friday, the outfit said:
We are short $AMC. Fundamentals are obvious. After one month of trading sideways and lots of money lost in call options, the pump seems increasingly shaky.
The news has rattled some shareholders, and perhaps encouraged others to follow Iceberg's lead.
Now what
Iceberg Research's assessment of the company's fundamentals is reasonable. The movie business remains challenged, and AMC stock itself remains richly valued. The stock's far from the kind true buy-and-hold investors can plan on holding -- blindly -- for the long haul.
This meme stock, however, has transcended all of the usual factors that determine a stock's price and turned into an exercise in predictive (and contrarian) psychology. Investors with a taste for speculation may ultimately find today's selling has set the stage for a bounce.
At the very least investors should recognize Iceberg Research has a vested interest in seeing this entertainment stock move lower.
