After hitting over 400,000 in mid-December, fails to deliver in shares of AMC Entertainment Holdings, Inc. dropped 98% to close out 2021.
The latest data, released today by the SEC, follows a long-term pattern in the stock. Fails to deliver bounce around at high levels for much of the month, only to disappear at month’s end.
Let me be clear just how out of line fails to deliver in the tens and hundreds of thousands are for AMC. Here are the fails to deliver for some of the largest companies in the world, based on the latest data set:
Microsoft Corporation: 527
Apple Inc: 61,677
Amazon.com Inc: 57
Tesla Inc: 0
Meta Platforms Inc: 0
Keep in mind, many of these companies are hundreds of times the size of AMC by market cap. So even when AMC fails to deliver are at just a few thousand, they’re way out of line for a stock its size.
So why would such a relatively tiny company have so many failed trades?
Such a persistent pattern of large fails to deliver is often evidence of illegal naked short selling.
A persistent pattern of large fails to deliver is often evidence of illegal naked short selling. #AMC $AMCTweet
This involves selling short shares one does not own. Naked short selling is a powerful tactic to push down a share’s price.
If you’re not limited by having to borrow shares, you can sell forever!
So why do these fails to deliver tend to get cleaned up at the end of the month? Perhaps someone at the exchange or the SEC doesn’t like how it looks to end a month with a large number of failed trades, and insists they settle.
But they pop right back up soon after…perhaps once a superior’s back is turned.
I expect to continue to see massive numbers of failed trades in AMC shares on a regular basis until the SEC steps up and solves this problem once and for all.
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