AMC TO $100,000 | What You MUST Know

What's at Melbourne Capital? It's Wall Street bets here. And before we start the video, we gotta grab some popcorn because before we go to the Moon, we gotta make a quick pit stop at the movie theater and talk about the insanity that is AMC.

That's right, not only are they playing A Quiet Place 2, but their stock is making people a lot of money in a retail field buying frenzy, causing the stock price to go higher and higher, causing hedge funds to lose billions of dollars and earning everyday traders life-changing amounts of money because they like the stock.

And what makes things even crazier is that, unlike GameStop, whose share price peaked at just under $500, AMC has a very loyal audience who believes that under the right conditions, the stock price could be worth as high as $100,000 each due to a unique short squeeze opportunity that quickly drives up the price of the stock, forcing hedge funds to cover and buy in, causing it to go even higher and higher and higher until who knows when.

So let's cover exactly what's going on, how this works, why some people are making so much money, and what this means for you watching, whether you're just curious or you want to know if it's too late to buy in and if this actually has a chance to one day hit $100,000 a share.

Although before I cover this mind-boggling movie theater money printing machine of AMC, it would mean a lot to me if we took that like button into the Moon by holding it until it turns blue. And best of all, if we could get this video to 100,000 likes, I will take ten thousand dollars of my own money and invest it in AMC so that way, if we hit that goal, each one of your likes is worth 10 cents towards holding the line even stronger.

So thank you guys so much, and also big thank you to Melvin Capital for sponsoring this video. Just kidding, guys, that was a joke. Let's start the video!

All right, so first, AMC. They're the largest movie theater chain in the world with almost a thousand locations, ten thousand screens, and 200 million customers, myself being one of them. Because AMC was a staple of my childhood, how many of us will never forget leaving school on a Friday afternoon and then being too scared to fall asleep at night because you saw Brandon Frazier's The Mummy? Well, you partially have AMC to thank for that.

However, some could say that those were the Glory Days for AMC because during the mid-2000s, home entertainment became more affordable. Netflix began taking market share away from more traditional outlets, fewer people were going out to the movies, and now with YouTube, Hulu, Disney Plus, and a variety of other streaming platforms, movie theaters appeared to be turning into the mummy that they once featured while their stock price slowly declined in price.

But then, as though things were not bad enough, the illness hit. AMC Theaters announced that they would be closing all locations across the U.S. for 12 weeks. Their box office hit, Trolls, announced that they were bypassing the movie theater entirely for on-demand access instead, and there were rumors that the movie chain would soon be facing bankruptcy.

But in a last-ditch effort to stay afloat, AMC was able to raise enough money to restructure their debt and stay afloat just a little while longer to be able to reopen. But even so, that was not enough to guarantee their success. In December of 2020, they warned that there might not be enough movie theater demand. Warner Media announced that they were going to be releasing their movies on HBO Max, which would take away from AMC's selection, and the movie theater executives admitted that they didn't know how much money they would make as a result.

In fact, just a few months ago, they said that existing cash resources would be largely depleted by the end of 2020 or early 2021. So why is it then now that the stock is going to the Moon? Well, in January of 2021, one, they were able to raise $917 million from investors, completely taking the risk of bankruptcy off the table.

It was at that time that users of Reddit's Wall Street Bets took to the community to revitalize the beaten-down stock by buying it up and causing the hashtag #SaveAMC to trend on Twitter, resulting in the stock price increasing almost 500% in a few days. Now, what made this so unique is that AMC was within a group of heavily shorted stocks by hedge funds who felt like the demise of our favorite movie chain was inevitable.

And it was almost as though once the Reddit Wall Street Bets community got wind of this, they wanted to do anything they can to stick it to the Man and cause the hedge funds to lose as much money as possible, and it's working. Back in February, AMC was the third most shorted stock in the stock market with almost 80% short interest.

And more recently, they were said to be under attack by hedge funds who wanted to suppress the price of the stock, believing they would eventually go the way of Blockbuster, who just couldn't adapt to an ever-changing consumption of media. But Reddit saw that as an opportunity to turn things around, and here's how they made that happen.

To understand how this works and what's going on right now, you need to familiarize yourself with the term "short selling." On the most basic scale, this is a bet made by companies and individuals that the price of a stock is going to go down.

But how this works is a little bit more telling as to how theoretically AMC could go to $100,000 a share. And of course, as usual, here's my do-it-yourself Photoshop of what's going on. If I am a short seller, I could borrow shares from a brokerage and then immediately sell them at market value to somebody else while I sit back and collect the proceeds.

But because they technically borrowed those stocks from a brokerage, I need to pay them back. Well, thankfully, if the price of those stocks goes down, I could buy them back at a cheaper price, return them to the brokerage, and that difference is mine to keep. However, if the price goes higher, I then have to pay more money to return those shares that I borrowed, and potentially my losses could be infinite depending on how high those stocks go.

Just think of it this way: if I bought a stock for $10, the most I'm able to lose is $10. But if I shorted a $10 stock and it goes to $100, well now I lose $100, and theoretically the stock price could keep going up higher and my losses are infinite.

Reddit users are very much aware that this stock is heavily shorted by hedge funds, which means that the higher the price of stock goes, the more money hedge funds lose. And at some point, they'll have to cover their positions, which means they'll have to buy back the stock they borrowed at a higher price, which translates into more demand to buy the stock, which drives the price even higher, causing other hedge funds to also cover their positions, causing the price to go even higher.

Before you know it, we're caught in another infinite money glitch that keeps sending the price higher and higher and higher until infinitely possible. Think of this almost like a real-life game of chicken between hedge funds and Wall Street Bets, and whoever flinches first loses.

If hedge funds can outlast the retail investors driving up the price, they'll make money. And if those retail investors can outlast the hedge funds, then they'll make money. Right now, AMC actually does have some legitimately good news behind them helping fuel their surge in stock price.

Like, for example, they just raised $230 million by capitalizing on their recent momentum by selling an additional eight and a half million shares, with the intention of using that capital to take over other leases and fund renovations within their existing theaters. In addition to that, movie theaters made a huge comeback this last weekend with over $100 million in ticket sales, proving that perhaps movie theaters are going to be sticking around for the long run.

Of course, it's also resulted in hedge funds losing $1.2 billion in the process while the stock continues to go even higher. And of course, that naturally brings us to the question: how high could this go, and can it actually hit $100,000?

Yeah, really! I know it sounds absolutely crazy, but enough people are talking about this to want to take this question seriously and actually go over the math behind it. And remember, as investors, we can't be delusionally optimistic. It's our jobs to think objectively, without emotion, and without blindly buying into something because we want to make as much money as fast as possible and stick it to the hedge funds because we got diamond hands.

But instead, here are the facts to focus on, and then you could make the decision for yourself. Now, on the surface, a share price of $100,000 would bring the market cap of AMC to $245 trillion dollars. Yes, that's right! It would be worth 22 times more than Apple, 45 times more than Facebook, and 75 times more than Tesla, which I think sounds pretty absurd.

But because of how the market fundamentals work, an insane market cap for something like AMC wouldn't be entirely out of the ordinary. Let me explain: the price of a stock is largely dictated by what's called the total float, meaning how many stocks are actually available for sale on the market.

If a company has 1,000 total shares outstanding but only 100 of them are available for sale, those 100 shares will be dictated by supply and demand, and therefore dictate the value of the company. But if you further restrict the stock to the point where only 10 of them are for sale and the other 990 people are holding, then theoretically those 10 stocks could sell for way more if there's enough demand to buy them, and that in turn artificially raises the price on paper for everybody else.

So that, in theory, is kind of what's happening here. Investors are thinking that if enough people could buy up the supply of AMC stock, they could drive up the price and force hedge funds to have to buy in even higher so they could return those shares that they borrowed.

And when everybody agrees to hold out for a certain price, then theoretically the price of the stock is dictated by whatever people are willing to sell. But even if we completely suspend logic here and the price of the stock does actually hit $100,000 a share, not everybody would be able to sell at that price because there's just not enough money in circulation.

What's most likely going to happen is that as we continue going up in price, there's going to be buyers who decide to cash out, adding more supply to the market and suppressing the price of the stock. So, well yes, you could limit supply, hold, and then ask whatever price you want when the hedge funds are forced to cover; the truth is the higher the price goes, the more likely people are to sell.

And at some point, that's got to reach an equilibrium where something's got to give. The more people begin to sell their positions, the more downward pressure we're going to see on the stock, the more hedge funds are going to be doubling down on their positions, and the quicker this is going to fall.

So in terms of answering the question, is it possible to go to $100,000 a share? If people are willing to hold at any price and completely disregard their own money just so that hedge funds could go out of business, then yes!

Theoretically, it's possible, but it's also theoretically possible that I'll win the lottery tomorrow and then walk outside and get struck by a bolt of lightning because I forgot to smash the like button for the YouTube algorithm. It would just take a coordinated effort unlike anything I have ever seen before.

Well, people leave millions or even billions of dollars on the table just to prove a point, and realistically, Reddit users like Turd Lipstick would be pretty tempted to sell if they're up $50 million and all they have to do is swipe up and their life is forever changed.

Although in order for this to continue, more retail buyers would have to continue buying in and continue holding. Otherwise, the whole thing falls apart. It's really yet to be seen how many more retail buyers will continue buying in and how many more of the short sellers will continue to double down.

At this point, it really has absolutely nothing to do with the actual fundamentals of the company but instead a unique situation of people holding on to the stock combined with a high level of short interest causing the price to go up even higher, causing more people to pile in combined with retail enthusiasm to screw over the hedge funds.

And if all goes according to plan, the hedge funds will be forced to cover, causing the stock price to go to the Moon. The difficult part really becomes at what point will retail traders begin to sell and to what point will hedge funds begin to cover? Everybody just can't buy and hold forever!

And for every one dollar the price goes up, the temptation grows for people to begin selling off. As responsible investors, we gotta call it for what it is: it's a highly speculative gamble that could make or lose you a lot of money, and you have to be prepared for either scenario ahead of time with a plan.

At any point, the music could stop and you're going to be left scrambling to find a chair to sit down on, whether that's $30, $40, $50, $100, $1,000—it's anyone's guess! But that price is going to be dictated by how many people choose to hold on to the stock and when people decide to eventually cash out.

Personally, I think the choice of AMC's CEO to sell eight and a half million shares and raise $230 million is one of the smartest moves they could have made. Even though technically it does kind of work against the retail traders, it does give the company a great lifeline and they're able to get much more money than they would have otherwise.

More importantly, though, it does represent a big shift of power away from large institutional investors and into the hands of retail traders who very much have the power to move markets. I've been saying this for a while, but I do believe that retail traders have been underestimated in today's market.

And this is a good example that Wall Street Bets should not be taken lightly, and retail traders have shown that they have the conviction to prove a point. But just be careful because when this is all over, somebody is going to be left holding the bag and losing money that maybe they can't afford to lose.

And don't get me wrong, I would love for this to continue going up in price because this has been incredible to watch, but really what happens next is anyone's guess. I would say the main takeaway is just this: right now, investor behavior is the main driving force behind the market.

Fundamentally, AMC is probably not worth the price, and that's why they decided this was the right time to sell off eight and a half million shares. But that doesn't mean that this specific situation can't continue to drive the price even higher.

But at least now you understand exactly what's going on, how this works, and why the stock price has gone up so much lately. In the meantime, I'm going to sit back, relax, and go and watch A Quiet Place 2 at AMC so I could pay my respect and give them a little bit more business.

And who knows? Maybe one day we could see Wall Street Bets: The Movie, coming soon to an AMC theater near you. So with that said, you guys, thank you so much for watching! I really appreciate it. As always, make sure to destroy the like button, subscribe button, and notification bell.

Also, feel free to add me on Instagram; I post pretty much daily, so if you want to be a part of it there, feel free to add me there. As my second channel, The Graham Stephan Show, I post there every single day. I'm out posting here, so if you want to see a brand new video from me every single day, make sure to add yourself to that!