According to figures from British trading company Freetrade, buy orders for AMC are up almost 300% on the week, and it is the most traded stock on the platform. Meanwhile, more than 63% of all new trades executed by UK traders on Capital.com in the past two weeks have been in financial derivatives linked to shares in AMC.
This is a significant jump from just 23% last month. Capital added that more than 82% of UK clients this week took a long position in the so-called meme stock. AMC was also the most purchased share on Hargreaves Lansdown, the biggest retail investment platform in the UK, over the past week with GameStop (GME) following closely behind.
It comes as AMC warned investors on Thursday not to "buy our stock right now", sending the price down as much as 30% before it pared back some losses.
In a filing it said: "We believe that the recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last.
"Under the circumstances, we caution you against investing in our Class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment."
On Wednesday the cinema chain closed 95% higher on the day at $62.55 (£44.32), bringing its year-to-date gains to more than 3,000%. As of Wednesday’s close AMC had a market cap of $28bn, surpassing that of Delta Air Lines (DAL) and GameStop, the latter of which also joined the rally.
Shares of Bed, Bath and Beyond (BBBY), Express (EXPR) and Koss (KOSS), which are all heavily shorted by Wall Street’s elite, were also caught up in the retail frenzy, all of which saw their share price rise more than 30% during the session.
Freetrade added that GameStop and Blackberry also featured in the top 20 stocks traded this week, as well as AMC and GameStop falling within the top 10 ISA buys in May.
Over the last 10 days, AMC has traded an average of about $6.4bn worth of stock each day. The recent surge comes as retail investors aim to trigger a short squeeze on the stock.
A short squeeze forces those who bet against the stock to buy in order to forestall bigger losses, sending the stock price much higher.
According to data from global financial analytics company Ortex on Wednesday, the estimated short interest in AMC is 18.39% of freefloat, with 91.7m shares shorted. Short sellers are yet to cover their positions.
#AMC - Short Interest Update$AMC continues its strong upward momentum, up over 14% in the pre-market since yesterday's close of $62.55.
Estimated #ShortInterest is 18.39% of FreeFloat, with 91.7m shares shorted
— ORTEX (@ORTEX) June 3, 2021
Ortex provides intra day and historical data for days to cover, shares on loan, utilisation rate, cost of borrow and freefloat on loan.
On Wednesday, short sellers lost $3.85bn from AMC, BBBY and GME’s rally alone, although borrowing still increased in all three stocks as hedge funds are still betting on the share prices to tumble.
AMC said in its filing that short squeezes, social media, retail trading platforms and a host of other factors might be driving volatility in its share price. More than three million retail investors now hold about 80% of AMC shares.
"For shareholders getting emotionally charged at these market gyrations, and the thought of squeezing the shorts, remember the massive risk you’re taking," Freetrade senior analyst Dan Lane said.
"The stock doesn’t know you own it and won’t always act like you want it to, especially in the short term. Don’t get too buoyed by a rise, or too distraught at a fall and keep in mind those solid long-term investment principles."
"Can you truly back the fundamental investment case behind your decision? Because, when the excitement dies down, that’s all you’ll be able to rely upon."
On Thursday, the company filed to sell up to an additional 11.5 million shares after Mudrick Capital Management, which purchased $230m of AMC shares and then sold them in the open market for a profit, advised the chain that it should take advantage of the rally by selling stock to stay in business.
AMC’s filing does not obligate the company to sell additional shares now or at any time. It merely allows the firm to reserve the right to sell stock.
The involvement of Mudrick "has been pivotal to the survival of AMC over the past year, so it shouldn’t come as a surprise they threw them a bone," Edward Moya, senior market analyst at Oanda Corp said in a message. "This was a perfect time to have a capital raise as the retail army of traders were excited AMC was raising money for acquisitions and investments."
AMC also announced plans to deepen its relationship with shareholders, revealing a new shareholder platform that will offer investors perks including offering free popcorn to investors that go back to the movies. A company's stock is its currency and using surges in interest or price to drive business is a straightforward strategy.
"There’s no doubt some corners of the market still want to stick it to the short-sellers - the same names like GameStop and AMC are popping just like they did earlier this year," Lane said. "But there’s a bit more nuance this time around."
Watch: AMC files to sell 11 million shares, cautions investors
"Look beyond the charts and AMC is still a cinema chain that has had to muddle through a year without new flicks or bums on seats. A Quiet Place Part II reigniting the box office, and raking in over $80m, so far shows we are still interested in the silver screen and investors have noticed."
He added: "Meme mania might be part of the surge but often investors just need a bit of reassurance that their theories aren’t completely misguided. The past month might have gone some way to providing that for those backing a reopening trade and overall return to normal.
"The company does need to be careful though. Tapping shareholders for $230.5m to help buy new cinema leases was welcomed as it seemed to signal aggressive expansion plans. But filing to dilute shares on the back of a big rise might feel like a kick in the teeth for investors."
Meanwhile Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said this week: "We would advise investors to proceed with caution and avoid following the herd into hot stocks which are the subject of frenzied speculation. It is a highly risky strategy and people should only dabble at the edges of their portfolio with money they can afford to lose."
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