© Reuters
By Dhirendra Tripathi
Investing -- Meme stocks AMC (NYSE:) and BlackBerry (NYSE:) posted double digit gains in premarket Wednesday, as the craze for them refuses to die.
AMC was up 32%, on track to open at a record high, while Blackberry (TSX:) added 19% and the original darling, GameStop (NYSE:) rose 5%.
Tuesday’s exit of Mudrock Capital Management from AMC, within a few hours of putting in $230.5 million equity in the multiplex operator, seemed of little significance as its shares seemed set for another blockbuster day.
The company will use the cash proceeds to revamp its existing outlets and create more leases. Investor interest in the stock has also heightened as people set out to shop and visit theatres and restaurants after being holed up home for a year.
The company has raised $658.5 million equity through two separate exercises in less than a month.
AMC, GameStop and Blackberry, have been at the center of an almost six-month-long battle with retail traders on one side and hedge funds and other big institutions on the other.
While the big boys have been short on the stock, the small retail traders, using various chat applications and social media chat platforms like Reddit to coordinate their action, have come together to cause a short squeeze on the stocks – a phenomenon where the stock begins to rise against an expected fall, causing losses to those who were positioned to trade on the fall.
AMC last week replaced GameStop as the favorite of the Reddit gang, according to Bank of America findings.
Many experts have warned that the small savers, who are looking for quick money, could end up hurting themselves as the fundamentals of the companies aren’t strong enough to justify those valuations.
The warnings have made little difference as the stocks have mostly maintained their elevated levels, in AMC’s case still making new highs.
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