In a flash from the past, meme stock volatility on Tuesday sparked trading halts in AMC Entertainment Holdings Inc (NYSE:AMC) and GameStop Corp (NYSE:GME) shortly after the market open.
The former is holding up well after CEO Adam Aron said the company is actively searching for transformational M&A opportunities.
AMC shares were halted on a circuit breaker at about 9:39 a.m. Tuesday and resumed trading minutes later.
What To Know: On March 15, AMC announced that it made a significant investment in gold and silver miner Hycroft Mining Holding Corp (NASDAQ:HYMC). The stock has more than doubled since the announcement, which has been met with a resurgence of retail investor interest in several names.
AMC initially surged in popularity near the beginning of 2021 as traders banded together in an attempt to induce a short squeeze as a result of outsized short interest in the movie theater stock.
Related Link: Benzinga's Daily Brief On Trending Tickers For March 29, 2022: GameStop, Tesla, OIL ETF And More
Tuesday's trading halt may be a result of upbeat retail investor sentiment paired with lingering high short interest. Despite many firms getting burned by short positions in AMC last year, 20.29% of AMC's float is currently being sold short, according to data from Benzinga Pro.
Digging Into The Mine: Retail traders seem to be focused on Aron's comments about additional M&A opportunities ahead for AMC, yet his comments on the Hycroft Mining acquisition may be getting overlooked.
"In Hycroft, we found a company that was exactly like AMC a year ago," Aron said Monday on CNBC's "Squawk On The Street."
He highlighted the company's liquidity problem and noted that it was facing corporate debt without AMC's investment. Another similarity may be the number of people betting against the miner.
According to Benzinga Pro data, Hycroft Mining's short interest is 23.12%, it has a total float of about 47 million shares and a market cap of less than $250 million.
A stock with the characteristics of Hycroft Mining should be even easier to rally around and squeeze higher than AMC, and of course, any significant rally in Hycroft will positively impact AMC following the company's large investment.
In the interview Monday, Aron noted that the fundamentals of AMC's movie business alone do not support the stock's valuation.
"As to grow into the valuation that currently is out there for AMC, [AMC shareholders] are expecting moves like Hycroft and ... the market response to the AMC investment in Hycroft was very positive both for Hycroft and for AMC."
Benzinga's Take; As Hycroft Mining shares move higher, AMC stands to benefit. Is AMC's Hycroft Mining investment really just a move to serve up a stock with short-squeeze potential for AMC shareholders?
AMC Price Action: AMC has traded between $8.31 and $72.62 over a 52-week period.
The stock was up 1.53% at $29.77 at time of publication.
