For a brief moment, Aiden and his friends believed they were investing gods.
Aiden is a 20-year-old business student at San Diego State University. In recent months, he and his friends have been attracted to the Reddit group WallStreetBets, where users trade stocks and show off their ‘diamond hands’. They bought GameStop and AMC Entertainment, two sick companies that the group predicted would start in the short term.
As the shares rose upwards, they liquidated other positions so that they could place more in both. Then they celebrated by watching “The Wolf of Wall Street” together. Aiden, who asked not to use his full name, confidently predicted that his investment would rise to $ 40,000.
“I was definitely perky. We were all perky, ”he said. “I thought it was going to the moon. Everyone on Reddit said it was going to moon. ”
AMC experienced a cruel year as the pandemic forced theaters to close worldwide and led to an almost total loss of revenue. The company was still taxed by debt before the strike, and had to seek several rounds of new financing to stave off bankruptcy. The stock fell below $ 5 per share in September and fell briefly below $ 2 per share in the first week of January.
But then WallStreetBets got involved. On January 27, the stock rose to $ 20 a share because users kept it with the hedge funds that shortened the stock. But the euphoria was short-lived. Robinhood, the platform favored by many retailers, restricted the purchase of the shares and several others the next day, and the price collapsed. It traded just over $ 7 on Friday.
Many of the retail investors who have flocked to the company over the past two weeks still persist, saying they believe it offers good long-term value, especially once the pandemic is over.
“I enjoy AMC. I enjoy going to the theater. “One day we’ll be in theaters again,” said Vince Santoria, a 22-year-old student from Oswego, Illinois. Maybe I invested a little with my heart, but that’s an OK thing. ‘
Whatever eventually happens to the stock, Santoria is ready to get it as a learning experience. He’s in Phi Kappa Psi at the University of Illinois at Chicago, and he and some of his fellow brothers have a group where they talk about stocks and flip through the memes of WallStreetBets. But until he bought AMC and GME, he was a peek at the Reddit group.
Santoria admitted he was a little late for the AMC and the GME party. “He bought AMC for $ 15. He said he invested between $ 3,000 and $ 4,000 on both options and common stock, and that he was 53% lower. He does not intend to sell his ordinary shares.
“I really enjoyed doing things like trading options and what a gamma expression is,” he said. “Maybe I did not win with this trade, but I learned something from this trade.”
Jordan Permenter, a 27-year-old video editor in Ocala, Florida, said he also bought the stock because he believes in AMC’s future. He bought in at $ 6.50 a share and said that for some reason he was still holding on.
“This is the theater where I saw ‘Star Wars,'” he said. “When the pandemic was over, he predicted ‘people will crave a big bucket of popcorn.’
On Wall Street, analysts are mixed about the company’s prospects. Michael Pachter, of Wedbush Securities, argued that the increase in the interest of retail investors was a positive signal.
“I really believe that if we are back to normal, the biggest box office will last six to seven months,” Pachter said. Variety. “I think the company is going to thrive.”
But Eric Handler, an analyst at MKM Partners, said the company would still incur a huge debt burden, even after the release of the film.
“It’s not just about the pandemic,” Handler said. ‘This is a company that is still being heavily exploited. Survival has very costly costs. ”
Verlin Campbell, who works in IT at Sony Pictures in Culver City, California, said he bought back AMC shares in March or April. According to him, it was like supporting a restaurant by picking up.
“It felt like I was betting on my industry,” he said. “I did not do anything crazy. It was nothing that would make me rich or send me to the poorhouse. ”
He did not expect the stock to rise before moviegoers returned to theaters, and the Reddit craze surprised him. After Robinhood limited the orders, he decided it was time to sell – and he lost most of his shares at about $ 14 and earned a few hundred dollars in profit.
“It was nice,” he said. “As someone who was not one of the Reddit people, I learned a lot and the country also bullied those Robinhood guys.”
For Aiden, it was not fun at all. He said that as soon as his shares started to decline, he had “the most panicky four hours I have ever had”. He tried to limit the damage, but ended up losing a few thousand dollars on Gamestop and earning a little on AMC. One of his friends lost $ 10,000.
“I’m really humble,” Aiden said. “I realized how stupid it was. Why did I consider it cool? I never thought of myself as someone who could be easily manipulated by the media or social media. I have to question that now. I can not see that I go back and do again what I just did. ”