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AMC pops as Reddit traders double down

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Yahoo Finance’s Julie Hyman, Myles Udland, and Brian Sozzi discuss the latest action in the Reddit-fueled meme stocks craze, and break down why the rally isn’t going away anytime soon.

Video Transcript

MYLES UDLAND: All right, let's take a look now at the meme trade because as we mentioned, I mean, it is full on back in this market. AMC is now the star of the show, taking over from GameStop. But let us not sleep on GameStop, which has had a huge week. AMC shares, as we noted in the premarket, up about 15%. And Julie, we see the heat map here of some of these meme names. But I am just shocked to see AMC up about 35% over the last week, up 17% in premarket trade.

And we talked to Rich Greenfield a week ago. And he was sort of, like, telling us, reminding us that this is still a very much a passionate Reddit trade. And I think I had certainly fallen asleep on it. And here we are, with gains now looking-- stocks basically doubled in just a couple of weeks.

JULIE HYMAN: Yeah, and you know how he reminded us, he said that AMC is not a good business and still is in secular decline. I wrote up that story and got quite a lot of Twitter hate from folks who are still short squeezing that stock. So that was a little bit of a wake up call for me personally to know that people on Reddit were still paying attention to the likes of an AMC. Pretty incredible, isn't it?

I'm actually going to switch on over since we're looking at AMC because I am curious to look at that sort of longer term chart. There's a two-year chart of AMC. I mean, look at that thing. It's just kind of amazing. The thing was obviously left for dead, right? And then we saw the initial spike, the spike now, obviously, larger even than that.

We got some interesting numbers, by the way, from Bespoke Investment Group that also talks about sort of the magnitude of the activity around AMC. They report-- they said that yesterday, AMC stock alone made up nearly 2/3 of the New York Stock Exchange consolidated turnover. And they said the NYSE is only one trading venue, but still, even as a sample, it was consisting of so much of that trading volume and turnover, $16 billion traded. It's just kind of staggering to think about, guys.

BRIAN SOZZI: Yeah, it's really interesting. I would say it's more interesting now than what it was earlier in the year. And that's predominantly because we have people going back to work. They're going back in the office. And if they're not going back to work, they're venturing outside even more. So I would argue, we don't have the same contained audience of traders as we did earlier in the year. So to see this action is very fascinating. I will note this, too. The action is back in a big way. You know what the stock price, Julie, and the short sellers likely covering their shorts here.

But I'm on Twitter this morning. You see the hashtag #AMCstrong, hashtag #AMCsqueeze. There are a lot of people, supporters of AMC out there right now on social media trying to send this stock up even further. So it could be another wild end to the session for this stock, and even to a lesser extent, in GameStop.

MYLES UDLAND: And I would note, too, that--

JULIE HYMAN: Are you guys going to the movies? Is anybody in this-- is anybody here going to the movies? Has anyone gone to the theater?

MYLES UDLAND: There's no-- no, I'm-- we're going to do fundamentals? We're going to pivot the fundamentals here? Come on.

JULIE HYMAN: No, but I mean, at some point, will--

MYLES UDLAND: No, I have not.

JULIE HYMAN: --fundamentals matter?

BRIAN SOZZI: I didn't mention fundamentals.

MYLES UDLAND: I mean, look, of course, at some point, they matter. I think that point is not today. I was just going to say that I think, Sozzi, to your point about people have other things to do, I mean, I agree. We can all-- you know, I think maybe that that idea of a captive audience perhaps maybe was a little overplayed in terms of how much that factored into the retail trading environment. I think what factors into the retail environment is that everything went up last year.

And a lot of people who, maybe at the beginning of the year, didn't know what they were doing and sort of figured it out over time using Robinhood, or, basically, any platform now is free. So the trade itself is costless. They made money, a lot of money. I think a lot of individuals significantly beat the market last year, using a variety of different strategies. Maybe the strategy is to throw stuff at the wall and see what works.

But most stocks, like the vast majority of individual securities, went up in price last year. Forget about the strong index gains that we've seen. So the AMC story, as you note, Sozz, it's a replay of the GameStop story in that you have coordinated online communities talking up a stock, getting in the stock, and seeing shares move higher. There's a ton of options activity inside of AMC as well. And so, I mean, I think that it worked one time, and now people are like, well, that's the playbook, so we can make it happen again.

And I mean, I think it's clear that this is not going to be the last episode of this. I don't know what the next name will be. But it seems very obvious that this strategy is not just going to go away over time.

BRIAN SOZZI: Well, one small stat here before we get going. If it opens at its current levels, AMC's market cap might be a little over $16 billion. It just crossed $10 billion for the first time yesterday. So it's-- I mean, these are mind blowing movies we're seeing here. The stock's up about 125% so far on the week.

MYLES UDLAND: And if I look at the long-term chart-- I know Julie had pulled up the one-year and the two-year earlier-- the record high that I'm seeing via our data is right around 36 bucks a share. So that's-- I mean, that's the level to watch today, right? It's only 5 bucks away from that on pre-market indication. So we'll see where things--

BRIAN SOZZI: All about those fundamentals.

MYLES UDLAND: --shake out. Yeah, all about fundamentals. All right--