At the close of the US markets on Wednesday, AMC Entertainment Holdings Inc (NYSE: AMC) was trading at US$ 62.55, up by 95%. In after-hours, another 5%+ gain is likely.
The growth in AMC's price began in earnest last week, with the price rising from US$12.38 to US$26.12. This week has been just as intense, with the previous two day's booking noteworthy rises of 17% and the 95% mentioned above.
GameStop Corp (NYSE: GME) also experienced a considerable jump in price over the same time frame, up by 56.5%. As of Wednesday closing, the original meme stock was trading at US$282.24.
While on its way to pre-pandemic patronage, the world largest Cinema company is undoubtedly not inspiring investors purely with its fundamentals. Rather, I suspect that investors are inspired by the recent media reports detailing the phenomenal losses that short sellers are continually racking up.
On 26 and 27 May, it was reported that GME and AMC short sellers lost $618 million and US$754 million on respective days, as the meme stocks rallied. Last week alone, AMC short sellers lost US$1.2 billion. These numbers are incredibly intoxicating for short squeezers.
Is it just me, or is there more mainstream reporting of the short sellers' daily losses more frequently?
While I believe there is an uptick, I don't think these reports were the initial catalyst of the current run-up in price seen in GME and AMC. However, I believe it is spurring meme investors to increase their positions in the stocks and push past the 'natural' short squeeze price of the stocks.
If what short squeezers believe will eventuate in the mother of all short squeezes (MOASS), the extra price paid for each stock right now will be immaterial to them. Likewise, if short squeezers can inflict a little more pain on hedge funds along the way, then the cost incurred for another turn of the screw appears to be entirely worth it.
Please note, BlackBull Markets do not offer the option to trade AMC or GME. However, we do offer exposure to the major US indices and stocks such as APPL, TSLA, MSFT, etc.
The Mother Of All Short Squeezes, or MOASS for short, is how the impending once-in-a-lifetime squeeze of GameStop Corp shorts is being referred. And rightfully so. Everything surrounding this event is historical, and whatever eventual short squeeze prize eventuates, whether shares are selling at $1,000 or $1 million, it will not negate the importance of the event. It will still be the MOASS, a blueprint moving forward, and a necessary counter for imprudent short positions.
If, or when, the MOASS occurs, and the proof of concept is validated, I predict that we will immediately see short squeeze attempts on other heavily shorted stocks.
Attempts were made in the past to squeeze the shorts on other heavily shorted stocks. But these felt like half-hearted attempts and too early a distraction from the GameStop Squeeze, which had not worked itself to a solid conclusion.
In the heat of the February squeeze frenzy, AMC Entertainment Holdings Inc, Koss Corporation, BlackBerry Ltd, spiked by 300%, 1,800%, and 240%, respectively, before incurring significant drops. The periphery squeezes have all lost significant interest since those heady days at the beginning of the year. Four months later, nothing has been able to match the stamina maintained by GameStop squeezers. There has, of course, been fluctuations in the GME price, but a strong pool of squeezers has always remained, diamond-handed as they say.
It would not be too controversial to speculate that if the MOASS comes to fruition, money will immediately begin flowing into other heavily shorted stocks. Veteran and virgin squeezers will want to recreate the success of the MOASS and squeeze more from short sellers across a range of other stocks.
I will be keeping an eye on AMC, KOSS, and BB as the potential first responders to the MOASS. But squeezers might also turn their collective interest toward Nokia Oyj, Bed Bath & Beyond Inc, and Discovery Inc.
But for now, all eyes are on GameStop. The concept will have to be proven over there before interest creeps into other heavily shorted stock.