Meme stock names are running wild again today. The focus is squarely on AMC Entertainment Holdings (AMC) at this point, but we're seeing other crazy action as well. Bed Bath & Beyond (BBBY) is pushing higher by 38%. PetMed Express (PETS) is up over 30%. Even Nikola (NKLA) has sprung back to life. And Pennsylvania Real Estate Investment Trust (PEI) has nearly doubled over the past two days. The commonality is huge short interests across the names.
This type of action brought the market to a standstill earlier this year after it came to an abrupt end.
Are these illogical moves? Absolutely, but the borrows are hard, the put options priced for huge moves, and the notion I or anyone else has a clue where the top to any of these names exists is beyond us all. GameStop (GME) has managed to hold far more of its gain for far longer than the traders I know thought possible. The same could happen with AMC. Maybe its new home is $50. That would basically put it on the cusp of being one of the largest 500 companies measured by market cap listed on U.S. indexes.
Stop and think about that for a moment. The company wasn't profitable in 2019, before COVID, as it lost $1.44 per share. In 2020 it lost $39 per share and looked headed for bankruptcy. Not much has changed for the business but it is on the verge of being one of the top 500 companies.
And as I was typing this, the stock skyrocketed to $61, got halted, opened and dropped to $51, and got halted again.
The phrase, "Danger, Will Robinson," comes to mind. It doesn't matter if you are long or short. This type of action has the ability to damage your portfolio in the blink of an eye. If you're playing in these names, and I won't fault you if you are looking for action, but be prepared not to leave your desk. A bathroom break could cost you ten grand before you flush.
It's crazy out there, so be careful. I'm watching from the sidelines on this insanity for now. Any trade I could post would likely be gone by the time it hits your eyes. That's how nuts these movements are. This is a time when you need to be able to rely 100% on yourself. If you're feeling uncomfortable, then be patient. There will be other opportunities.