What happened
This might not be the "mother of all implosions," but shares of AMC Entertainment (AMC 10.12%) are trading down 6.8% at 11:34 a.m. on Thursday, the second consecutive day the stock is heading lower. Yesterday, AMC shares tumbled 12.7%.
The movie theater operator began an amazing run higher a little over two weeks ago, more than doubling in value after AMC said it was buying into a gold and silver miner. It rocketed 45% high in one day of trading when CEO Adam Aron said the cinema stock was looking to do more such deals.
The sell-off is likely just some profit taking, as the stock is still 77% above where it was before the rally began.
Image source: Getty Images.
So what
AMC has become the face of the meme stock phenomenon, with Aron fully embracing the small retail investors who have mostly stuck by the movie theater stock after shares soared to more than $72 apiece before beginning their long slog lower.
For example, the theater chain's earnings conference calls now mostly feature just questions from shareholders, not Wall Street analysts. Aron also regularly fields ideas on Twitter from investors on where he should go next with the company.
However, the purchase of a 22% stake in Hycroft Mining was Aron's own idea, as he seeks to apply the experience he gained from taking AMC from the brink of bankruptcy to a stock presumably in turnaround after having secured $1.8 billion in liquidity.
Now what
As AMC's shares were running higher, investors were hoping this was the big short squeeze many have been hoping for. As gain piled on gain, they looked for short sellers to cover their positions to push the stock even further.
Now that momentum has stalled, the potential for the "mother of all short squeezes" diminishes.
