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AMC, Blackberry and GameStop rally as Reddit investors go up against hedge funds again
Thursday 10 Jun 2021 Author: Yoosof Farah

The boom in the so-called ‘meme stocks’ AMC Entertainment, Gamestop and Blackberry first seen in January and February 2021 looks like it could be repeating itself.

Shares in all three have rallied since the last week of May and are once again closing in on peaks reached at the end of January after being targeted once more by retail investors on the WallStreetBets forum on social media network Reddit.

In early trade on 7 June, AMC shares shot up around 19% to $56.70, Blackberry shares around 12% to $15.50 and GameStop over 10% to $273, despite no corporate news from any of them.

There have been renewed calls on WallStreetBets to ‘pump’ the three stocks, with posters calling for their fellow investors to hold AMC at a ‘resistance level’ of $55 before aiming to take it $100 per share, and to take Blackberry to over $30 a share.

While other stocks have been targeted before like Nokia and even commodities like silver as well as cryptocurrencies, the current frenzy of retail interest remains pretty much restricted to AMC, Blackberry and GameStop.

These were the main stocks that were a focus of a push earlier this year by Reddit investors to force a ‘short squeeze’ on hedge funds that were shorting the companies and looking to profit from their misfortunes.


Some hedge funds incurred heavy losses as a result, but others have doubled down on their bets against the three stocks, arguing that their current valuations are vastly inflated compared to the fundamentals of their businesses.

That has led the Reddit investors to pile in once more as they look again to inflict losses on the hedge funds shorting the shares.

In part this is being sold as an attempt to draw attention to a wider point about how financial markets operate, with short interest in GameStop earlier this year reaching a high of 140%.

Whether this attempt will be long lasting remains to be seen, with regulators potentially more likely to seize on any volatility in the wake of the previous episode.

Meanwhile cinema operator AMC put out messaging to smaller investors as it launched a new share sale, effectively telling people not to buy the stock ‘unless you are prepared to incur the risk of losing all or a substantial portion of your investment’, adding that its current share price reflects ‘market and trading dynamics unrelated to our underlying business’.

This is a pretty stark warning, and should at least be food for serious thought for prospective investors. It came as AMC unveiled plans to sell up to 11.6 million shares off the back of its surging share price, with money raised going towards ‘general corporate purposes’, which could include paying off debt or buying new cinemas. 

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