AMC stock jumps nearly 15% as retail-fueled rally stretches to another week


An AMC theater is pictured in Times Square in the Manhattan neighborhood of New York City, New York on June 2, 2021.

Carlo Allegri | Reuters

AMC Entertainment, the meme stock that stunned Wall Street recently, rose double digits on Monday as speculative trading in the battered movie theater picked up.

AMC's shares rose as much as 25% on Monday, after rallying 80% the previous week. AMC has dethroned GameStop to become the star on the infamous WallStreetBets forum on Reddit, with retailers encouraging each other to get into the stock and call options.

AMC stock closed 14.8% higher at $ 55 on Monday.

A call option is an instrument that gives an investor the right to buy a stock at a specified price within a specified time frame.

AMC is up more than 110% in June alone, after climbing 160% in May, pushing its rally to nearly 2,500% in 2021. The stock far exceeded its January high amid the GameStop trading mania, hitting an intraday record of $ 72.62 last week.

Other meme stocks also traded higher on Monday as momentum built. Bed Bath & Beyond was up 7.2%, while BlackBerry was up 13.8%. GameStop gained 12.7%.

In the midst of the wild trade, TD Ameritrade said Sunday it had raised the margin requirements for AMC and GameStop to 100%, which means investors must buy all securities with cash. The brokerage firm said it could also introduce additional requirements for opening deals with AMC options that expire on Friday.

"#NakedShorts" and "#NakedShorting" were hot on Twitter on Monday as well as on the weekend, referring to the increased short interest in AMC. Naked shorting is the illegal practice of short selling, in which the short interest in a stock can sometimes be greater than the tradable stocks in the market due to discrepancies between paper and electronic trading systems.

According to data from S3 Partners, AMC has sold about 18% of its floating stocks short, compared to about 5% for the average US stock. Short sellers betting against AMC suffered $ 2 billion in losses last week, S3 data showed.

The Securities and Exchange Commission said Monday it was keeping a close eye on the wild trade to see if there has been "market disruption, manipulative trading or other wrongdoing."

"It is extremely tempting to buy these stocks short, but if you do not have huge liquid resources, please try to resist the temptation because these prices can hit unimaginable highs before they settle down to reasonable valuation, and you may have to cover on the high. " Period, "said Interactive Brokers Chairman Thomas Peterffy in CNBC's" Squawk Box "on Monday.

"Over the long term, stocks are always approaching their fundamentals, which in this case are much, much lower," added Peterffy.

AMC took advantage of the massive rally last week, selling 20 million shares in two separate transactions and grossing around $ 800 million in cash. CEO Adam Aron has indicated that he wants to sell up to 25 million more shares.

- CNBC's Kevin Stankiewicz contributed to the coverage.

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