AMC shares have fallen after Iceberg Research disclosed Reuters ’brief position on the agency

By Akanksha Rana and Sinéad Carew

(Reuters) -AMC Entertainment shares fell 12% on Friday after tweeting that the short seller Iceberg Research had made a low bet against the shares of the theater chain operator.

The so-called meme stock fell 8.9% to $ 49.40, after falling to $ 47.77, after Iceberg said on Twitter that it had sold the shares briefly, leading to the borrowing of the shares with a view to repurchasing lower prices. bet.

“Our position is based on the company’s fundamentals and the price of stocks has been inflated by call options, which is temporary,” said Arnaud Vagner, founder of Iceberg Research.

Bearish investors forced to release bets in the face of rising stock prices have helped AMC, GameStop (NYSE 🙂 video game store and other well-known online forums like RedSit’s WallStreetBets this year.

Shares of AMC, although below the June 2 high of $ 72.62, rose more than 2,000 percent so far after ending at $ 2.12 by 2020.

Vagner said that while there are risks associated with betting on meme stocks, “any rise is corrected quickly. That’s inevitable.”

Vagner, a former credit analyst who founded the company in 2015, declined to disclose details of the company’s short position.

The last AMC meeting saw a tough stock market trade, which gives buyers the right to buy or sell shares at a fixed price in the future, where the share price is.

When the share price rose dramatically, market leaders who sold AMC options were forced to buy shares in the company to offset their exposure, increasing the share in a phenomenon known as stock squeeze.

AMC did not immediately respond to the request for comment.

“These meme stocks are very disastrous in the trade, it doesn’t take much to move up or down,” said Eric Handler, MKM Parners, who is “selling” AMC’s rating at a price of $ 1.

Handler warns that AMC’s sales price will multiply in 2022 by more than 2022 before interest, taxes, depreciation and amortization (EBITDA) compared to the historical multiple of EBITDA estimates 9 times before movie pandemic stocks before the pandemic.

“At some point, I don’t know when it will be, there will inevitably be some kind of average reversal with AMC. I don’t think a 45-fold multiple EBITDA can be sustainable,” he said.

Iceberg gained attention in 2015 for highlighting what he called the aggressive accounting practices of the Hong Kong-based Noble Group https://www.reuters.com/article/us-noble-group-debt-focus/back-from-the- brink- how-how-was-saved-from-a-noble-freezing-clash-idUSKCN1LK0GI. The noble merchant trader denied the allegations, but then saw that his profits had collapsed and forced him to sell most of his assets.