AMC soars 15% as Reddit stocks and reopening favorites buck tech sell-off
- Shares of AMC Entertainment soared as high as 18% Monday, joining a broader rally and bucking the tech sell-off.
- AMC was boosted on news that Wedbush doubled its price target on optimism around the economic recovery.
- Reddit favorite Gamestop also surged on Monday as well as airline companies.
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Shares of AMC Entertainment soared 18% on Monday, joining a broader rally as Reddit darlings and reopening favorites bucked the tech sell-off. The stock pared some gains, closing 15% higher for the day.
AMC joined Reddit favorite Gamestop on Monday, which surged 43% after the video game retailer announced that board member and Chewy founder Ryan Cohen will lead its strategic transformation. Cohen has been pushing for the company to go towards a direction similar to what e-commerce giant Amazon took.
Airline companies including Delta, Southwest, United, and American, all climbed as well on optimism of an economic recovery thanks to the Senate's approval of the administration's $1.9 trillion stimulus plan over the weekend. Disney, meanwhile, hit a record high as California set a date of April 1 for a limited reopening of theme parks in the state.
AMC, a meme stock and another Reddit darling, also rose on news that Wedbush analyst Michael Pachter doubled his price target from $2.50 to $5.00 on optimism of a post-pandemic environment. Pachter did note his concerns about the movie theater chain's debt burden.
The Wedbush report cited that AMC has been taking the right re-opening precautions, which has allowed it "to drive some attendance over the last several months, while many major markets were closed for several months as the virus continued to spread."
But it also said that "AMC may take years before it is able to revisit its prior growth strategy as it repays its growing mountain of debt."
The analyst maintained a neutral rating that has been in place since March 2020.
Since the start of the year, AMC's stock price has skyrocketed more than 500% driven in large part by a group of retail traders on Reddit's Wall Street Bets forum targeting stocks shorted by hedge funds.