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AMC investors tried to take stock for the moon



For a brief moment, Aiden and his friends thought they were investing in gods.

Aiden is a 20-year-old business student at San Diego State University. In recent months, he and his friends have been attracted to the Reddit group WallStreetBets, where users trade stock tips and brag about their “diamond hands”. They bought GameStop and AMC Entertainment, two sick companies that the group predicted would take off in a short time.

As the shares rose, they wound up the other positions so that they could invest more in both. Then they celebrated by watching “The Wolf of Wall Street” together. Aiden, who asked not to use his full name, confidently predicted that his investment would shoot up to $ 40,000.

“I was absolutely stunned. We were all handsome, “he said. “I thought it was going to the moon. Everyone on Reddit said it was going to the moon. ”

AMC has had a brutal year, when the pandemic forced theaters to close worldwide and led to an almost total loss of revenue. The company was burdened with debt even before the closure, and has had to apply for several rounds of new financing to prevent bankruptcy. The stock fell below $ 5 per share in September, dipping briefly below $ 2 per share in the first week of January.

But then WallStreetBets got involved. On January 27, the stock rose to $ 20 per share as users rallied to hold it for hedge funds that had shorted the stock. But the euphoria was short-lived. Robinhood, the platform favored by many retailers, limited purchase of the stock and several others the next day, and the price collapsed. It traded at just over $ 7 on Friday.

Many of the retail investors who flocked to the company in the last two weeks still hold on and say that they believe it provides good long-term value, especially when the pandemic is over.

“I like AMC. I like going to the movies. “One day we̵

7;ll be back in theaters,” said Vince Santoria, a 22-year-old student from Oswego, Ill. Maybe I invested a little with my heart, but that’s OK. “

No matter what happens to the stock in the end, Santoria is ready to criticize it as a learning experience. He’s in Phi Kappa Psi at the University of Illinois at Chicago, and he and some of his fraternity brothers have a group where they talk about stocks, and throw around the memes from WallStreetBets. But until he bought into AMC and GME, he had been a fan of the Reddit group.

Santoria acknowledged that he was “a little late to both the AMC and the GME party.” He bought AMC at an average cost of $ 15. He said he put in $ 3,000 to $ 4,000 on both options and common stock, and was down 53%. He has no plans to sell his shares.

“I enjoyed learning to do things like trading options, and what a gamma clip is,” he said. “I may not win at this trade, but I have learned something from this trade.”

Jordan Permenter, a 27-year-old video editor in Ocala, Fla., Said he also bought the stock because he believes in AMC’s future. He bought in at $ 6.50 per share and said he “still holds for some reason.”

“It’s the theater I first saw ‘Star Wars’ in,” he said. When the pandemic is over, he predicted “people will long for a big bucket of popcorn.”

On Wall Street, analysts are mixed with the company’s prospects. Michael Pachter, of Wedbush Securities, argued that the increase in interest from private investors was a positive signal.

“I really think when we get back to normal, it’s going to be six to seven months with the biggest box office,” Pachter said. Variety. “I think (the company will) thrive.”

But Eric Handler, an analyst with MKM Partners, said the company will continue to face a huge debt burden even after film returns.

“It’s not just about getting through the pandemic,” Handler said. “This is a company that is still heavily utilized. Survival costs very high. ”

Verlin Campbell, who works in IT at Sony Pictures in Culver City, California, said he bought AMC shares back in March or April. In his mind, it was like supporting a restaurant by getting takeaway.

“It felt like investing in my industry,” he said. “I did not do anything wrong. There was nothing that would make me rich or send me to poverty. ”

He did not expect the stock to go up before moviegoers returned to theaters, so Reddit mania surprised him. When Robinhood limited orders, he decided it was time to sell – and got rid of most of the shares for around $ 14, and net a few hundred dollars in profits.

“It was fun,” he said. “As someone who was not one of the Reddit people, I learned a lot, and the country did too and screwed the Robinhood guys.”

For Aiden, it was not fun at all. He said that when his stock began to plummet, he had “the most panicky four hours I’ve ever had.” He tried to limit the damage, but ended up losing a few thousand dollars on Gamestop and earned some on AMC. One of his friends lost $ 10,000.

“I’m really humble,” Aiden said. “I realized how stupid this was. Why did I think of this as cool? I never thought of myself as someone who was easily manipulated by the media or social media. I have to ask questions about that now. I can not see myself going back and doing what I just did again. ”




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