AMC Stock Extends Downside by 12%, What’s Next After The Sell-Off?

One of the most popular meme stocks to storm the narrative of Reddit and other stock-touting social sites; AMC has had a rough couple of weeks. Rallying behind another coordinated short squeeze, retail traders pushed AMC stock way past all-time highs and analyst target prices – reaching prices upwards of $55. The last few days have seen a widespread sell-off in the stock, and this time it isn’t just retail traders. 

A few days ago, CEO Adam Aron sold a further $9.65M in AMC stock – selling 312,500 shares for a price of $30.86. With last month’s sale of 625,000 shares, it brings the total sold shares to nearly 1M for the AMC CEO. Furthermore, AMC CFO Sean Goodman sold the complete total of all his 18,316 shares for a total of $565,000.

So what does all this internal selling mean for the popular cinema stock? It’s much more difficult to measure accurate company sentiment when Covid fears are mounting once again; throwing live entertainment companies like AMC right under the lockdown hammer. Whether the sell-off is indicative of Covid fears or whether there are more worrying long-term factors for the company, profit-takers have been the loudest voice in the market the last few days. 

With some retail traders attempting to stir excitement surrounding cheap AMC shares, the short squeeze allows for further downside potential, with the stock still priced around 10 times higher than at the end of 2020. Although overdue a retracement, we can only see how retail traders will react in the coming weeks and months, and if/how the resurging pandemic will affect companies for the second time around. 

After reaching losses of 8% with the opening of Tuesday’s market, AMC has since picked up some momentum, now showing a loss of just under 2% – demonstrating meme-buyers are still active. Price is trading around the $22.70 level. 

 

Should you invest in AMC shares?

If you’re a smart investor, you will know that having large-cap stocks in your portfolio is vital. They are more mature companies, considered safer investments, trade with less volatility, have greater analyst coverage, and in most cases, have a steady dividend stream. Due to the current market environment, we think now is the perfect time to add large-cap stocks to your portfolio. But which large-cap shares should you buy? Our stock analysts regularly review the market and share their picks for some of the best large-caps to invest in