AMC SHARES SINK AFTER ICEBERG RESEARCH REVEALS SHORT POSITION

AMC Entertainment shares fell as much as 12% last week after short-seller Iceberg Research tweeted that it had made a bearish bet against the theater chain operator's stock, Akanksha Ranha and Sinead Carew reported for Reuters.

The so-called meme stock was last down 8.9% at $49.40 after falling as low as $47.77 following Iceberg's disclosure on Twitter that it had sold the shares short, which involves borrowing shares with a view to buying them back at a lower price to cover the bet.

"Our position is based on the fundamentals of the company and the fact its stock price has been inflated by call options, which is always temporary," said Arnaud Vagner, founder of Iceberg Research.

Bearish investors forced to unwind their bets in the face of a rapidly rising stock price have helped fuel rallies this year in AMC, video game retailer GameStop and other companies that are popular on online forums such as Reddit’s WallStreetBets.

AMC shares, while well below their June 2 peak of $72.62, were still up more than 2,000% year-to-date after finishing 2020 at $2.12. Vagner said that while there are risks associated with betting against meme stocks, "any sharp rise is followed by a correction.

This is inevitable." Vagner, a former credit analyst who created the company in 2015, declined to reveal details of the firm's short position. AMC's latest rally was helped by heavy trading of equity options, financial derivatives that give buyers the right to buy or sell shares at a fixed price in the future, depending on where the stock price is.

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