AMC cinema shares surge in 'frantic' trading

Shares in the US cinema chain AMC surged on Wednesday in what could mark a return to frenzied trading that rocked markets earlier this year.

Trading in AMC Entertainment was halted briefly several times as high volumes of shares were bought and sold.

AMC stock climbed as much as 100%, peaking at $69.09 part-way through the day.

The firm promised to give free popcorn to smaller investors.

Analysts have said that so-called "meme" stocks, such as AMC and GameStop, should be approached with caution.

It is the latest example of amateur investors trying to seize power from Wall Street giants.

Major hedge funds had bet billions of dollars that GameStop and AMC's shares would fall.

But they have faced losses after amateurs, swapping tips on social media sites like Reddit or Twitter, drove prices up.

In the year to date, shares in AMC have soared 3,000% - despite its cinemas being largely shut during the pandemic.

"It's frantic volume," said Brian Overby, analyst at Ally Invest.

The renewed interest prompted the company to update its offer for retail investors, who can now claim a tub of free popcorn or go along to exclusive movie screenings.

AMC has been among the biggest gainers from a deluge of interest in meme stocks, fuelled in part by a new generation of social media-centric small traders.

The shares were trading at just over $2 at the end of last year.

"The party could go on as long as investors continue co-acting," said Ipek Ozkardeskaya, senior analyst at Swissquote. "The problem is, the higher the price goes, the higher is the temptation to take profit and walk away."

AMC was the most heavily traded name in options on Wednesday, with 3.5 million contracts changing hands.

About $30bn worth of AMC shares had been traded by midday, by far the most of any stock on Wall Street.

#AMCstock was trending on Twitter in the US as shareholders discussed their holdings.

Susannah Streeter, senior investment analyst at Hargreaves Lansdown said: "The swell under the share price has been gathering for some weeks as investors searched out re-opening stocks which could benefit from the easing of social restrictions.

"Add into the mix strong takings for cinemas over the weekend and a possible loss of appetite for crypto investments following recent falls, and the swirl of interest has intensified."

She said that were was also a "legacy effect" from the GameStop saga at play, and cautioned that investors should "proceed with caution and avoid following the herd into hot stocks".

AMC shares surged a day after hedge fund Mudrick Capital Management sold a $230m stake in the company for a profit shortly after acquiring it, saying the stock was overvalued.

Investors appeared unfazed by the sale, which some analysts said was an attempt to cash in on the retail-driven rally.

"There's a retail fanaticism with this stock right now," said MKM Partners analyst Eric Handler, who has a sell rating and a $1 price target on AMC stock. "There's such a disconnect between what the stock's doing and what the fundamentals look like."