Why is AMC one of the most shorted stocks in stock market history?

AMC Entertainment Holdings Inc (NYSE:AMC) is a movie theater chain that has been struggling to survive amid the COVID-19 pandemic. The company has been losing money for years, and its debt load is over $5 billion. However, AMC has also become one of the most popular targets for retail investors who are betting on a turnaround and a recovery of the cinema industry.

AMC is one of the so-called “meme stocks” that have been driven to extreme highs and lows by online communities of traders, such as Reddit’s WallStreetBets. These traders use social media platforms, online forums, and chat rooms to coordinate buying and selling strategies, often aiming to squeeze out short sellers who are betting against the stock.

Short sellers are investors who borrow shares of a stock and sell them, hoping to buy them back later at a lower price and pocket the difference. However, if the stock price rises instead of falling, short sellers face mounting losses and may be forced to buy back the shares at a higher price to close their positions. This creates a positive feedback loop that pushes the stock price even higher, known as a short squeeze.

According to Fintel.io, AMC had a short interest of 116.8 million shares as of July 15, 2023, which represents 22.62% of its float (the number of shares available for trading). This is a very high level of short interest, indicating that many investors are pessimistic about AMC’s prospects and expect its stock price to decline.

However, AMC also has a loyal fan base of retail investors who believe in its long-term potential and are willing to hold the stock despite its volatility. These investors have been buying more shares of AMC, especially during dips, and have been encouraging others to do the same. They have also been using social media hashtags such as #AMCSTRONG and #AMCSqueeze to spread their message and rally support.

As a result, AMC’s stock price has been experiencing wild swings, reaching as high as $27.50 per share in January 2023 and as low as $3.77 per share in July 2023. The stock has also been subject to trading halts, margin changes, and regulatory scrutiny due to its unusual activity.

AMC is one of the most shorted stocks in stock market history because it represents a clash between two opposing forces: short sellers who are betting on its downfall and retail investors who are betting on its comeback. The outcome of this battle is uncertain, but it is likely to continue generating headlines and excitement for both sides.