AMC Stocks Might Surge, but It Has Nothing to Do with the Future of Movie Theaters

You might be seeing headlines discussing the rocketing stock price of AMC Theatres, a chain that felt the hurt not only of the COVID-19 pandemic but the general trend against in-person theaters in the ongoing war between brick-and-mortar houses and streaming services. These headlines have nothing to do with the health of AMC or the future of theatrical film screening. A miraculous group of Redditors didn’t band together to say “Hey, you know what rules? Seeing Tenet on the big screen. Christopher Nolan was right.” Instead, shifting their gaze from GameStop, the first soon-to-be obsolete company targeted by r/WallStreetBets, an online community has decided that AMC was in such a bad spot as to be the perfect target.

Let’s explain. The Verge does a great job digging into the financial nitty-gritty, but what it amounts to is that Wall Street thinks companies like GameStop and AMC are doing terribly. They’re right: AMC has been toying with bankruptcy since last year’s pandemic hit them in the pocketbook. So these Wall Street hedge funds all made “shorts” (yes, like The Big Short) against the theater chain. That makes it highly attractive for the massive aforementioned group of day traders/meme makers—because if they all invest in a company that should be in the toilet, like one that can’t sell out a theater without infecting its attendees with a deadly virus, then they can artificially inflate the price.

Thanks to some ridiculous stock market nonsense that’s best left to Margot Robbie in a bubble bath, the shorting parties will then try to cover their play—which means buying more and, thus, raising the price even higher. If it sounds unsustainable and potentially disastrous for the hedge fund that bet that the stock would decrease in price…yeah, that’s the point: Screw them. Well, it’s one of the points, apart from some extremely online individuals making lots of cash.