AMC, other ‘meme’ stocks jump; regulator signals concern
Aaron Saldanha, Sinéad Carew and David Randall, 07 June 2021
(Reuters) -Shares of AMC Entertainment Holdings Inc and other “meme stocks” jumped on Monday, extending a rally in social-media favorites into a third week as message boards hummed with talk of squeezing Wall Street short-sellers.
The sharp gains prompted the U.S. Securities and Exchange Commission to say it was looking into signs of market manipulation given the “volatility in certain stocks.” The volatility has challenged analysts, and two of them in the past week have stopped covering video game retailer GameStop, whose shares soared in January in a retail-driven rally. Continue reading “Article: AMC, other ‘meme’ stocks jump; regulator signals concern”
The rise of the “meme stocks” has been a fascinating adventure with the combination of ubiquitous technology and the ability to drive trading by retail investors in a way that has never been experienced before. While a certain amount of manipulation of markets has always existed, the recent advent of trading forums, like Wallstreetbets on Reddit, and other digital communication methods, has shifted some of the influence away from big money to smaller investors pooling resources.
Wall Street’s top brokers are quietly tightening their rules for who can bet against retail traders’ most-popular meme stocks.
This week and last, AMC was targeted again and its shares skyrocketed 496% between May 24 and June 2 before retracing Thursday.
It has only been a few months since Reddit-enabled retail investors, or what some unflatteringly refer to as the “retail mob,” embraced GameStop Corp. and drove its valuation to the moon only to be frustrated by a sudden change against them in the rules of the game. Today, it’s all about AMC Entertainment Holdings Inc., whose skyrocketing value this week has already overcome what would normally curtail investor enthusiasm. The similarities are notable, as is the broader message about what is happening to the investment landscape. 
What happened
In a letter to his investors this April, David Einhorn, founder of the hedge fund Greenlight Capital and a well-known short-seller, complained that the stock market was in a state of “quasi anarchy.” As one piece of evidence, he pointed to Elon Musk, whose commentary on Twitter, Einhorn said, amounted to market manipulation. “The laws don’t apply to him, and he can do whatever he wants,” Einhorn noted. As another example, he cited a restaurant in rural New Jersey called Your Hometown Deli, which despite making $13,976 in revenue last year had somehow attained a value of $113 million on the stock market. 
AMC Entertainment Holdings (NYSE:AMC) is going on the offensive, selling over $230 million worth of stock to hedge fund operator Mudrick Capital Management at a premium so it can use the proceeds to make acquisitions.
About three months ago, the investing world was left reeling after retail investors proved they can beat Wall Street at its own game.
In January 2021, the rise of retail investing and the subreddit r/WallStreetBets sparked a broader speculative movement in a few stocks that ended up disrupting trading at brokerages and culminating in a Congressional hearing.
SEC chair Gensler says agency will enforce rules ‘aggressively’ against bad actors
Today is the deadline for 13F filings and while we already know what most of the marquee hedge funds have done during the quarter thanks to previously leaked investor letters (with the notable exception of the Soros Family Office which we learned over the weekend bought some $375MM of the Archegos shares liquidated by its prime brokers in late March), one filing was of particular interest, that of Scion Asset Management’s Michael “Big Short” Burry. And boy were there surprises.
In testimony Thursday before the House Financial Services Committee, newly appointed SEC Chairman Gary Gensler signaled that he is prepared to change existing rules to better adapt to the challenges of today’s market environment, and to ask Congress for more authority where needed.