Despite financial losses in Q1, some investors remain bullish on AMC Entertainment due to renewed interest from meme stock firestarter Roaring Kitty.
Investing in individual stocks carries risk and requires thorough research before making investment decisions.
Options traders have placed bets on a significant increase in the shares of GameStop Corp. (GME) and AMC Entertainment despite recent dips.
The most-traded call options for GameStop have strikes at $100 and $128, implying potential gains of nearly tripling or quadrupling the underlying stock by Friday.
In recent days, some options traders have placed bets on a significant increase in the shares of GameStop Corp. (GME) despite the stock's dip.
According to reports, among the most-traded call options are contracts with strikes at $100 and $128. These contracts imply potential gains of nearly tripling or quadrupling the underlying stock by Friday.
Despite GameStop's shares cratering on Wednesday, these options traders remain optimistic about a massive leap this week. The volume in the lower strike exceeded the number of outstanding positions prior to Wednesday.
Meanwhile, AMC Entertainment has also seen a resurgence of meme stock activity. Despite completing a $250 million ATM program on March 28, 2023, and reporting Q1 revenue that fell less than 1% year-over-year and an EBITDA loss of -$31.6 million compared to $7.1 million reported in the same period a year ago, some investors are still bullish on the stock.
The return of meme stock firestarter Roaring Kitty has fueled this renewed interest in AMC and GameStop. While retail investor activity has been more restrained compared to 2021, options trading remains strong for both stocks.
It is important to note that investing in individual stocks carries risk, and it's crucial to do thorough research before making any investment decisions.
Shares of GameStop fell 12% to $34, resulting in $1 billion in losses for short sellers according to Ortex Technologies.
Theater chain AMC shed 5.5%, following an 88% gain since Friday’s close.
Keith Gill’s X account, ‘Roaring Kitty’, was central in the 2021 meme stock rally with bullish posts on GameStop.
Accuracy
Theater chain AMC shed 5.5% following an 88% gain since Friday’s close.
GameStop stock is still nearly 70% below its 2021 peak, while AMC, which hit a record low last month, is 98% off its all-time high.
Deception
(30%)
The article contains selective reporting as it only mentions the losses of GameStop and AMC without mentioning their gains. It also uses emotional manipulation by stating that 'the euphoria over the return of Roaring Kitty fizzles out' and 'a wave of euphoric and speculative buying in the retail community which is never a good thing'. The article also implies facts without linking to peer-reviewed studies, such as stating that institutional investors were part of the meme stock mania.
But unlike 2021, when Reddit users banded together to target highly shorted stocks that burnt bearish hedge funds, this time institutional investors too were part of the meme stock mania.
The euphoria over the return of Roaring Kitty fizzles out.
Despite the losses on Wednesday, the two companies were among the top three most-traded shares by retail investors during the session.
Some options traders are betting on a significant increase in GameStop’s shares this week.
The most-traded call options have strikes at $100 and $128, implying potential gains of nearly tripling or quadrupling the underlying stock by Friday.
Accuracy
Prior to Wednesday, there were no open positions for the $128 strike option. The volume in the lower strike exceeded the number of outstanding positions.
Deception
(100%)
None Found At Time Of
Publication
Fallacies
(95%)
There is only one fallacy found in this article. The author uses an appeal to authority when describing the options traders as 'some' without providing any evidence or context for this claim.
some options traders were still betting on a massive leap this week.
Keith Gill, known as Roaring Kitty and DeepFuckingValue on social media, was at the center of the 2021 GameStop saga.
Gill’s return to tweeting has sparked a surge in GameStop and AMC stocks.
Accuracy
GameStop's stock jumped over 70% on Monday and 60% on Tuesday, while AMC’s surged nearly 80% on Monday and 30% on Tuesday.
GameStop took advantage of the rally to raise capital - $250 million in equity capital.
Both companies took advantage of the rally to raise capital.
Deception
(30%)
The article contains editorializing and sensationalism. The author uses phrases like 'market casino is back open' and 'Roaring Kitty is back' to create a sense of excitement and hype around the topic. She also implies that the recent surge in stocks doesn't make any sense, which can be seen as a judgmental statement. Additionally, she makes assumptions about the motivations of people investing in meme stocks without providing any evidence.
The market casino is back, at least for now.
Roaring Kitty is back, and people are tossing their money into the GameStop slot machine.
Fallacies
(85%)
The author makes several informal fallacies throughout the article. She uses hyperbole when stating 'Roaring Kitty is back, and people are tossing their money into the GameStop slot machine. Just remember, the house always wins.' This statement is an exaggeration and does not provide any evidence or facts to support her claim. Additionally, she uses a hasty generalization when stating 'This latest bout of meme-stock mania has a narrower bent: young, male, nihilist.' The author provides no evidence or data to support this claim and it is based on her personal observation. Lastly, the author uses an appeal to emotion when stating 'It feels a little sad... like it's trying to recapture a moment and spirit that is well in the past.' This statement does not provide any factual information or evidence but rather an emotional response from the author.
]Roaring Kitty is back, and people are tossing their money into the GameStop slot machine. Just remember, the house always wins.[
This latest bout of meme-stock mania has a narrower bent: young, male, nihilist.
Bias
(95%)
The author expresses a dismissive and cynical tone towards the recent surge in meme stocks and cryptocurrency, implying that it is a waste of money and that people are just gambling. This can be seen as monetary bias as the author seems to have a negative attitude towards individuals who choose to invest in these assets.
Roaring Kitty is back, and people are tossing their money into the GameStop slot machine. Just remember, the house always wins.
AMC Entertainment completed a $250 million ATM program on March 28, 2023
Total revenue for Q1 fell less than 1% year-over-year
EBITDA showed a loss of -$31.6 million compared to $7.1 million reported in the same period a year ago
Accuracy
Q2 box office revenue is down approximately 45% to-date
Deception
(70%)
The author makes several statements that require clarification and context. While the author correctly states that the cause of AMC's stock surge is not due to frenzied demand but rather meme stocks, they then go on to describe cinemagoers clambering over one another and queues stretching for miles outside AMC locations. This description creates a sensationalized image that may mislead readers into believing there is more demand for AMC than there actually is. Additionally, the author states that 'there's really not much to shout about' when discussing the company's recent financial results, but then goes on to mention significant losses and decreased revenue. This statement can be seen as an attempt to downplay the importance of these financial figures, which may be misleading. The author also uses emotional language such as 'significant uncertainty remains' and 'substantial uncertainty for equity values'. While these statements may be factually accurate, they are used to manipulate the reader's emotions and create a sense of unease about investing in AMC.
Looking at the company’s recent Q1 results, total revenue fell by less than 1% year-over-year, while EBITDA showed a loss of -$31.6 million compared to the $7.1 million reported in the same period a year ago.
The current capital structure creates substantial uncertainty for equity values.
AMC investors (and the company itself) have been reaping the rewards.
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy
Fallacies
(90%)
The author makes several statements in the article, some of which are true and others that are not. The author correctly states that AMC Entertainment's stock has experienced a strong rally but contradicts himself by stating that it is not due to frenzied demand but rather the resurgence of meme stocks. This is an example of a contradiction fallacy. Additionally, the author quotes Barrington analyst James Goss who expresses skepticism about AMC's financial situation and future prospects, which are valid assessments based on the company's recent financial results and uncertain business environment. However, the author also makes inflammatory statements such as 'queues stretching for miles outside its locations' and 'cinemagoers have been clambering over one another just trying to get into the latest screenings', which are intended to create a sensational narrative but do not accurately reflect the situation. These statements are examples of inflammatory rhetoric.
queues stretching for miles outside its locations
cinemagoers have been clambering over one another just trying to get into the latest screenings
