GameStop’s logo screen and trading information are displayed on the floor of the New York Stock Exchange (NYSE) on March 29, 2022.
Brendan McDermid | Reuters
Shares of two Mimi shares rose Thursday, adding an unexpected ripple to a stock market that has been declining in choppy trading for more than a month.
GameStop and AMC turned heads early last year when a group of retail investors coordinated deals in online chat rooms to create massive short squeezes in these stocks that hedge funds and other players widely hated. The meteorite rallies caused great pain to many hedge funds and other short sellers involved in these speculative names.
Since then, stocks have retreated from their peak prices, and short sellers are starting to build their positions again. According to FactSet, AMC holds a short 19.5% stake, while GameStop has a 21.4% stake. Short interest is a measure of what portion of a company’s available equity, or float, is short sold.
These big bets against the company can sometimes lead to dramatic one-day moves in the stock, as hedge funds move to close out their short positions when the stock rises, creating more buying pressure. This process is known as short pressing.
Even with the big moves that occurred Thursday, shares remained well below their highs from the first half of 2021. GameStop, which rose to $483 a share on a daily basis last January, was trading between $90 and $100 a share on Thursday. .
AMC, which hit $72.62 on the day last June, was at about $12 a share on Thursday.
Since the market capitalization of companies has fallen so much, it is easy for a few commercial stores, or even one large fund, to impose new short squeeze.
In 2021, both AMC And Jim Stop They took advantage of their temporarily high share prices to sell additional shares and raise capital. Adam Aaron, CEO of AMC, went to great lengths to embrace the retail investors who participated in the rally, answering small traders questions about earnings calls and offering shareholder privileges in physical cinemas.
AMC partially used the money it raised to buy other theaters across the country. However, the company also bought a stake in A small gold mining company Earlier this year it has a shaky financial history.
CNBC’s Yun Lee contributed to this report
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