The Reddit Rallyers are at it again! This week, shares in AMC Theatres shot up, and down, and back up again on another wild ride fueled by day traders who follow Reddit’s WallStreeetBets investment forum, which traffics in hot stock tips.
In fact, on Friday AMC was the most heavily traded stock on the New York Stock Exchange, with over 650 million shares changing hands, more than six times its average monthly trading volume of 106 million. The price of AMC shares has increased by 1,132% during the five months of 2021, as investors seek to capitalize on prospects for a resurgence of revenues at the world’s largest exhibitor.
This hyperactive trading and stock price fluctuations are also driven by dynamics that are endemic to rapid trading cycles, and not necessarily based on a clear-eyed assessment of the long-term performance of the company. AMC and other exhibitors face significant challenges in returning to profitability, including a hangover from debt incurred during the pandemic from 15 months of severely limited operation, ongoing capacity restrictions, and competition from a growing number of direct-to-consumer streaming services