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Why AMC Entertainment Is Rising Today

By Rich Duprey – Sep 29, 2021 at 11:21AM

Key Points

  • Retail investors have long contended big money interests are suppressing AMC's stock.
  • A lawsuit against Robinhood Markets seems to present evidence there was pressure put on it to limit trading.
  • A lot more proof may be needed to convince a court there was improper collusion.

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Have the dark pools and other shadowy figures suppressing the stock price been finally exposed?

What happened

Shares of AMC Entertainment (AMC 1.36%) are moving 2.7% higher in morning trading Wednesday on no specific news to the company. The move may spring from the idea that the so-called "apes" backing AMC could be vindicated in their beliefs that big-money interests have been conspiring against meme stocks

So what

Investors are suing Robinhood Markets (HOOD -0.11%) and various market makers, including Citadel Securities, over the role they played in suppressing trading in shares of AMC, GameStop (GME 1.23%), and other meme stocks. The lawsuit has revealed internal communications at Robinhood that seem to suggest Citadel -- Robinhood's biggest client -- pressured the brokerage to limit trading in certain stocks to help hedge funds that were bleeding massive losses during the short squeeze.

Gavel on $100 bills

Image source: Getty Images.

The Wall Street Journal quotes one of the chat messages from Robinhood's brokerage president Jim Swartwout as saying, "you wouldnt believe the convo we had with Citadel. Total mess."

Retail investors have long insisted big monied interests are manipulating the shares of AMC and other stocks to keep the price from rising to the levels they believe it should be trading at. They may feel vindicated now that it is being exposed.

Now what

While the message could be interpreted as suggesting Citadel was pressuring Robinhood, there's nothing explicit in it that even remotely comes close to that. The conversation could have been a "total mess" for any number of reasons, and both Citadel and Robinhood deny there was any pressure.

The apes will undoubtedly say that's what you would expect them to say and you need to read between the lines. While it's possible they're correct, they will need a lot more than that to prevail in court, but in the interim investors may be feeling upbeat that the lie is about to be exposed.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

AMC Entertainment Holdings Stock Quote
AMC Entertainment Holdings
AMC
$7.43 (1.36%) $0.10
GameStop Stock Quote
GameStop
GME
$25.60 (1.23%) $0.31
Robinhood Markets, Inc. Stock Quote
Robinhood Markets, Inc.
HOOD
$9.18 (-0.11%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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