The Negative AMC Stock Analysis That’s Firing Up Bulls Today

This move comes as reports suggest short seller interest in AMC stock has hit their highest levels in a year. Currently, approximately 22% of AMC’s float is sold short. For those who may not know what this number means, it’s high. Any time double-digit short interest is seen in a stock, it’s probability of squeezing increases, and its cost to borrow (for short sellers) also rises.

Now, some might suggest that higher short interest may mean that Wall Street believes Main Street is throwing in the towel on this trade. Let’s take a look at why this stock is rallying today, on the back of these otherwise bearish numbers.

Higher Short Interest Is Positive for AMC Stock?

For many investors in AMC stock, the fundamentals clearly don’t matter. Sure, this is a pandemic reopening play. Various blockbuster hits recently have also sweetened the opportunity with this company.

However, it’s clear that AMC’s debt load, and its future obligations related to lease deferrals that will need to be paid over time, provide a massive headwind. This is a company that, even operating at capacity and with higher margins on its food and beverage sales, probably won’t be profitable for years.

Rather than fundamentals, many retail investors have piled into AMC stock as a potential short squeeze. In 2021, a number of squeezes played out, much to the cheer of main street. These squeezes eventually led to significant fallout from various hedge funds that have shorted AMC previously.

Accordingly, today’s report that short interest has climbed to its highest level in a year is likely to continue to stoke interest in the short-squeeze potential of AMC. Will this stock squeeze again? Possibly. However, I’m going to happily watch the volatility from the sidelines. AMC is simply too risky for my portfolio.