At these levels of short selling, the stock is constantly at the risk of. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines. According to data provided by Yahoo Finance, as of July 29, AMC had 16 of the float shorted, which is considered high. On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. However, the conversion and the proposals will be placed on hold until at least the results for the preliminary injunction motion related to two putative stockholder class actions are revealed on April 27. The approval of these two proposals opened the door to converting AMC Entertainment Preferred Equity Units (NYSE: APE) into AMC stock. Last week, it was confirmed that shareholders voted in favor of a 1-for-10 reverse stock split and an increase in authorized shares. Meanwhile, AMC shareholders have experienced a slew of news in recent weeks. That is a significant decline in a short window of time, which could influence short sellers to take profits in light of a rising CTB. On top of that, AMC stock is down by over 25% for the month. If a squeeze drives the price higher, AMC is likely. Generally, a stock carrying a short interest above 10% is considered high, while a short interest above 20% is considered very high. AMC has struggled during the pandemic and remains burdened with a high debt load which likely will cause quite some issues down the road. That’s equivalent to a short interest as a percentage of float of 24.39%. This could ultimately increase the chances of a short squeeze.īased on the latest available data, 125.96 million shares of AMC sold short on Feb. A high or rising fee could also influence short sellers to sell out of their positions by buying the underlying stock in a bid to escape the high fee. As a result, a high CTB lowers the chances of emerging profitable in a transaction. That seems excessive and would require a trader to have a high degree of confidence in their trade. Imagine paying a 196% annual fee to borrow a stock. On the contrary, a high CTB fee could also be perceived as a positive for shareholders. Furthermore, a rising CTB can also signal a scarcity of available short shares. The fee goes up when short seller demand is high and goes down when demand is low. The CTB represents the yearly rate short sellers must pay to borrow stock. Meanwhile, the average cost-to-borrow fee for stocks is between 0.3% and 3%, while a high fee is classified as 20% or higher. What’s going on with AMC Entertainment (NYSE: AMC) stock? AMC’s cost-to-borrow (CTB) fee has risen to a high of 196.44%, up from 130.66% yesterday and 105.90% a week ago.
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