Shares of AMC Entertainment (AMC.N) surged another 38% in early deals on Wednesday and were set to open at a record high as individual traders on social media forums were unfazed by a hedge fund flipping its stake in AMC, calling it overvalued.
Hedge fund Mudrick Capital Management sold 8.5 million freshly issued AMC shares at a profit on Tuesday, a source said, immediately after buying them. AMC had earlier said it was prepared to make acquisitions with the new issuance, worth about $230.5 million.
Extending a red hot rally, the cinema operator’s stock traded at $41.90 on Wednesday, leading gains among the group of “meme stocks” including video game retailer GameStop Corp (GME.N) and BlackBerry Ltd that have attracted the attention of small-time traders on online platforms such as Reddit’s WallStreetBets.
“It’s not rational, but do not bet against it,” said a Berlin-based trader.
AMC’s stock has surged more than 1,400% this year and, at nearly $42, is trading at more than 10 times the median analyst price target.
The number of messages related to AMC on trading-focused social media site Stocktwits rose more than 7% on Wednesday, with most of them reflecting a positive sentiment.
AMC daily stock trading volumes in the past week have reached their highest since January, according to Refinitiv Eikon, while data from Fidelity showed it continued being the brokerage platform’s most traded scrip.
GameStop was up 4.5% in premarket trading, while Koss Corp (KOSS.O) jumped 13%. BlackBerry’s U.S.-listed shares were last up 18.6%, bringing their total yearly gains to more than 75%.