It isn’t too late to ride AMC (NYSE:AMC) stock’s massive wave with the rest of the crowd, but you should be prepared to get out of AMC stock before the hype dies.
Social momentum trading is here to stay.
Individual meme stocks may come and go, but we don’t see “meme stocks” as a whole leaving us any time soon. That’s why we see AMC stock as a potentially lucrative short-term play.
These aren’t stock picks to hold for decades, but they can be profitable with the proper mindset. But because of their nature, they can be just as dangerous as they can be profitable. Make sure you understand them before following the momentum fray into meme stocks such as AMC.
Our View on AMC Stock and Other Meme Stocks
Enabled by commission-free, insanely easy-to-use trading apps, retail investors reaped huge rewards by buying into GameStop (NYSE:GME). But, as in the video game Frogger, you have to keep moving. Ride the AMC train, but not forever. Hop on, enjoy the scenery, then hop off.
With our other stock picks, we’re usually recommending stocks with a solid basis and huge long-term upside. So, we understand if recommending AMC and other meme stocks seems hypocritical.
But, keep in mind that we are recommending a long-term strategy here — a “long-term short-term” strategy, if you will.
We strongly believe “Robinhood” traders are not an ephemeral trading collective, but rather a phenomenon that we’ll experience time and time again. The stocks will change, but the strategy will remain the same. If you attempt to ride meme stocks into the sun, you ‘ll likely get burned.
Growing up, your elders probably told you not to play with fire. As a dangerous element, fire should be respected, not played with. If you’re cooking with fire, you understand the potential risks. You don’t go around throwing olive oil around a gas stove with a lit pilot. Playing with fire just never ends well.
But it’s how you interact with it that can hurt you. The same advice applies for meme stocks.
Make sure you know the risks associated with investing based on social sentiment.
Meme Stocks: Should You Buy AMC Stock?
GME stock did, and continues to do, the unthinkable. GameStop stock’s retail-led rally against short sellers caused the meme stock to soar to unprecedented heights.
And then, it came back tumbling down to Earth.
Now, we’re witnessing GME climbing it’s way back up to the top on a revival of meme stock, short-squeeze hype. With 29.34% short interest, there’s plenty of fuel left for this particular fire.
And speaking of fire, AMC news continues to pile fuel into another meme stock’s hearth as well.
You may think you’ve missed the boat, that share prices have set sail without you, but there’s a chance this rally isn’t over.
Remember, GME doubled in price at first… and then it saw 10x gains.
Here’s why we think dipping your toes into AMC Entertainment could be a decent plan, with the right provisions.
For one, we believe the stock’s current 21% short interest means it should remain an attractive meme stock for the time being. For comparison, your typical S&P 500 company has fewer than 5% of shares sold short. AMC’s ratio isn’t quite as high as GameStop’s, but it’s still through the roof.
Couple this with recent news surrounding AMC, their CEO and rising movie theater popularity, and the stage is set for hype-driven growth.
This stock’s recent performance and headlines have the potential to lure in a new variety of investors as well, who could invest in AMC for reasons other than it being a meme stock.
People Want to Experience Movies Again
Where other meme stocks have absolutely zero basis for the growth they’re experiencing, AMC stock at least has some depth to it.
So if you’re going to be a meme stock connoisseur, AMC is as good a choice as any to have on your plate.
In relevant movie news, Cruella and A Quiet Place Part II recently drew movie-watchers out of their homes in numbers we haven’t seen in a while.
A Quiet Place Part II dominated the box office, grossing $57 million for Paramount (NYSE:PGRE) over it’s four-day opening. Pre-pandemic, it was projected to make the studio $60 million — not that far off from its post-pandemic run.
Disney’s (NYSE:DIS) Cruella hit a lower mark with a four-day total of $26.5 million. This isn’t bad, considering their lower numbers could be partially due to the aforementioned movie’s success.
Future prospects look even better for movie theaters when we consider that Cruella is also available to watch on Disney’s online streaming service. People are flocking to theaters to experience Cruella. Watching on a high-definition TV at home just isn’t enough.
Will in-person movies maintain the support they have now in the more distant future? That remains to be seen. Perhaps theaters can reinvent themselves and innovate, but we don’t see a permanent return to theaters as they once were.
AMC CEO Embraces New Investors
AMC’s CEO, Adam Aron, is proudly riding the short squeeze alongside the new wave of investors buying his company’s stock.
As the CEO of a meme stock, Adam Aron is sitting at the center of a all this madness, and he’s simultaneously fanning the flames in the best way possible by encouraging the underdog mentality championed by Reddit.
These underdog retail investors, or “apes” as they sometimes refer to themselves — a Planet of the Apes reference — have collectively captured Adam’s interest, in a good way. The CEO has even gone as far as donating $50,000 to a gorilla fund because of this “ape” joke.
He also delayed the company’s annual shareholder meeting by more than a month to find ways to make the meeting more accessible to new investors.
In a similar move, he announced on Twitter that he has started following AMC “apes” on social media to better understand the community that only recently has begun to own a significant stake in the company. Adam also claims he’s reading all replies and responding to messages himself.
He’s engaged with the community, which we see as establishing a greater sense of connection and familiarity between AMC and the retail investor portion of its shareholders that otherwise wouldn’t exist.
Underdog retail investors, joined by AMC’s own CEO, are passionately rallying behind AMC, an underdog company that traditional investors bet against.
But it’s the powerful-in-numbers meme stock enthusiasts that are winning the battle for now.
And there’s no telling how far social momentum can drive up AMC stock prices. But, there’s also no telling how far AMC could someday plummet either.
But… and I say this very seriously.
Just as quickly as meme stocks have bounced back, they could crash back down to Earth.
And that’s why I like to think of meme stocks as “high-risk, high-reward trades.” They are not long-term investments, which will unlock generational wealth through compounded gains over the next several years.
Instead, those investments opportunities are the types of opportunities you’ll find in my exclusive, venture-capital-style research platform, Innovation Investor – which is aimed at identifying, at early stages, the most innovative companies and explosive investment opportunities in the market. We seek out asymmetric opportunities to maximize reward and minimize risk.
Not GameStop, or AMC, or Bed Bath & Beyond, or Koss. Potentially great trades today. But great 5- to 10-year investment opportunities.
We find companies that are creating the future. Companies on the cutting-edge of the self-driving revolution… pioneering breakthrough gene-editing technologies… building the metaverse… creating AI-powered robots to automate everything… and more.
While meme stocks might make for a nice short-term return, these companies are 10X investment opportunities that can create life-changing, generational wealth.