Why AMC’s stock is falling

AMC Entertainment’s stock price is tumbling, as retail investors appear to have apparently lost their initial enthusiasm in meme stock.

AMC Entertainment shares continued to fall on Wednesday, 14 July 2021, as most investors reportedly disinvested in meme stock. Meme stock are the shares of companies that have reportedly seen a recent surge in viral activity on social media platforms, such as Twitter and Reddit. The buzz over a particular stock reportedly nudges retail traders to buy the stock, with the hope that its share price is likely to rise.

AMC shares were reportedly down by nine percent to $35.80 on Wednesday, from its early June all-time high of $72.63. The decline reportedly brought the company’s month-to-date losses to 41 percent.

The drop follows a series of share drops from other meme stock companies. GameStop’s share, which is reportedly the meme stock king, fell by more than 21 percent in July 2021, while newcomers such as Clover Health and Clean Energy Fuels plunged by 34.8 percent and 22.6 percent, respectively.

According to Michael Burry, who is an investor, meme stocks are set to crash like the dot-com and housing market bubbles of previous decades. Moreover, a further reason for AMC’s declining numbers is reportedly the company’s decision to not have shareholders approve a planned capital increase. AMC also reportedly announced that it would remove a proposal to increase its planned share sales from 525 million to around 550 million, and will not seek approval from anyone. Adam Aron, the company’s Chief Executive Officer (CEO), stated that this decision led to disagreements amongst the company’s retail investors.

However, despite the recent stock drop, AMC shares are still up by more than 1,400 percent, and GameStop reportedly had a rally over 780 percent in 2021. The massive gains for the two companies reportedly came from a brand of retail traders who coordinated trades on Reddit’s “WallStreetBets” chat room, which aims to dilute the short sellers.