AMC Entertainment survives COVID-19 as a result of recent short squeeze

AMC Entertainment was rumoured to file for bankruptcy in 2020 because of COVID-19, but now the company says theaters will be open for the year of 2021 (CBS). Ever since Dec. 14, AMC has raised $917 million of debt capital and new equity (CNBC). 

“This means that any talk of an immediate bankruptcy for AMC is completely off the table,” said CEO of AMC, Adam Aron following the bankruptcy rumours.

After this news was shared by the entertainment industry, shares of AMC stocks escalated. AMC wasn’t the only company that had shares go up tremendously, GameStop was also a big hit. 

These stocks are going up all thanks to short selling. 

Short selling is a term used when an investor borrows a stock then sells it back then to buy it when the price of the stock drops (Investopedia.com). 

The stocks of AMC and Gamestop are coming down as popular trading apps, such as Robinhood are limiting users to buying and trading more shares. At this time Robinhood has limited its users to only buy 350 shares of AMC and 20 shares of GameStop. 

Seven AMC theaters are already open near the Chicago area, with 35 more to open in Illinois (NBCChicago.com). Nothing at this time has been found of AMC theaters opening in Michigan. 

Aron told Variety that it was a very good decision to stay open and he is glad they made that decision for the entertainment company (Variety.com). 

The CEO also told CNN Business that the theaters will have enough money to stay open all through 2021. He also went on to state that in the beginning of 2022 he wants to look back on 2021 and see that the company raised enough money to stay open through the pandemic and that the movie industry is going back to normal (CNNBusiness.com).