It’s no secret that investors in meme stocks like AMC Entertainment Holdings, Inc. yearn to engineer a short squeeze. This vertiginous ascent in the stock’s price crushes short sellers, who must buy the shares to close their position and stop the bleeding.
It’s easiest to engineer a squeeze in a heavily shorted stock. Then, many shorts have to cover all at once, providing heavy demand for the shares and pushing the price higher.
If you look at the short interest in AMC shares, it doesn’t look particularly high, at 18%. But there’s another metric that tells a very different story.
AMC’s dark pool short interest is a whopping 51%…a majority of shares outstanding. If that figure were repeated in public markets, it would make AMC the #5 most shorted stock in existence.
The short sales may not show up on the NYSE, but they’re there. And in massive numbers.
So it may be a lot easier than it appears for retail traders to squeeze AMC shares.
Most retail orders go to dark pools. Since brokers tend to process their orders in the dark pools, retail traders could squeeze the short sellers even on this private platform.
To be clear, this is a high risk, speculative trade. I wouldn’t attempt it because the high risk bucket of my investments goes into tech startups.
But it just might work.
More on markets:
Citadel Holding Nearly $500 Million in AMC Options
How Did High Dividend Stocks Perform In the Last Crash?
Citadel Can’t Beat the S&P 500, Despite High Fees
Photo: “Nuts in a….” by ClawzCTR is licensed under CC BY-ND 2.0
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