Here is what investors should know about what could be a year of strong recovery for shares of the movie theater operator.
- Since the beginning of 2023 AMC stock (AMC) has been soaring. So far this year, shares have risen 62% with minimal resistance on the ascent.
- The stock’s performance in early 2023 is in the same league as some of the most ferocious rallies of the previous five years.
- Despite a historically bleak 2022, “meme frenzy” may have taken a breather, but in the coming year, retail investors appear to be returning the spotlight.
AMC Stock Recovers In 2023
AMC stock (AMC) had a dismal performance year in 2022. However, patient investors are beginning to see the tides reverse in 2023, and they are hopeful that this is only the start of a longer-term bullish trend.
AMC has seen a staggering year-to-date gain of 62% as of the writing of this line (year-to-date). The rally is noteworthy historically since the first 25 trading days of 2023 have returned among the top 10% of returns for any given 25-trading-day period over the previous five years.
The histogram shown below illustrates this. Take note of how much of a favorable outlier so far has been 2023.
Interestingly, there hasn’t been much debate on AMC stock’s growth in 2023. Shares only saw three consecutive days of declining prices once in January, which resulted in a very small decline of 7% on January 26.
But whenever the stock dropped, it quickly made up the lost territory within a few days.
Why Is AMC On Fire?
If there is even one single reason, it is difficult to pinpoint why AMC stock has been rising recently. Since AMC Entertainment has not yet released its Q4 results, company fundamentals are the least likely possible explanation (earnings will likely come out in the next few days).
Conversations on the suitability (or lack thereof) of specific short-selling techniques have apparently come up recently, as we have previously documented. Roger Hamilton, the CEO of Genius Group (GNS), has appointed a former FBI director to look into possible unlawful dealings in Genius shares and has all but declared war on naked shorting.
Retail investors have likely united more forcefully to generate bullishness as a result of the return to prominence of naked short selling.
The fact that AMC’s short interest is still so high, at 23%, undoubtedly helps. This is the greatest level of short interest in the last year, according to YCharts; the previous 52-week top was in mid-June 2022, at just under 22%.
The other important reasons that are likely boosting the price of AMC stock are macroeconomic and market-wide in nature. Stocks have begun to appear oversold to some investors as inflation pressures have subsided and interest rates have begun to stabilize. For instance, the Nasdaq 100 has gained 14% year to date.
However, it seems that even the large market is insufficient to fully account for AMC’s success. As an illustration, on Monday, February 6, the S&P 500 spent the majority of the day in the red while shares of the operator of movie theaters traded noticeably higher.
AMC In 2023: The Year Of The Apes?
The next natural concern is whether AMC stock can rise further from this point. Social media browsing reveals that the majority of AMC investors are certain that the answer is yes. If enough people think and act in an aggressive manner, it might become a self-fulfilling prophecy.
A little technical analysis might be able to provide some answers. We discussed a few weeks ago how the charts indicated a bullish recovery in the AMC stock, which has since become much more pronounced. Here’s the main lesson to learn:
“It is a wonderful opportunity for AMC stock bulls to capitalize on the initial momentum built. Hence, an uptrend may be on its way once the bulls thrive from hereon and knock the bears out of the picture.”
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