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Share the AMC insanity: ‘Ape’ cult hits its last stand as stock falters
By Charles Gasparino
February 5, 2022 9:54pm
https://nypost.com/2022/02/05/share-the-amc-insanity-ape-cult-hits-its-last-stand-as-stock-falters/

To follow the market travails of AMC Entertainment, a money-losing movie theater chain, is to come to terms with the phenomenon of how mass psychosis has taken over stock investing.

Yes, there have always been manias in the markets, but this one is different. What we have in the AMC imbroglio is a mania fueled by a cult-like conspiracy theory that is causing damage far beyond a few warped souls losing their shirts.

The AMC cult begins with an odd theory that shares are secretly controlled by a cabal of evil hedge funds that want to put the company out of business by illegally shorting the stock. In a regular short sale, a trader borrows a stock, sells it, then (hopefully) buys the stock at a lower price to return to the lender.

Hedgies, the conspiracy goes, take it a step further by magically creating fake or synthetic shares that put enormous downward pressure on the stock. They had their way for years until the so-called AMC Apes got involved.


‘Crush the bad guys’

The Ape rallying cry can be seen on Reddit message boards urging the following to buy AMC and crush the bad guys — essentially taking back the markets from Wall Street and return them to the people. Like most cults, us-against them do-gooding resonates with people looking for a life. Shares began to climb around this time last year, taking a penny stock to new heights as the Apes predicted a short squeeze that will send AMC stock “to the moon.” They will get rich and teach Wall Street a lesson.

If there’s evidence the manipulation theory is true no one has seen it. The Apes did drive the stock above $70 in June. But they’ve been down 80% ever since. Far from sticking to Wall Street, hedge funds have traded in and out of the stock opportunistically.

Despite all of this, the cult has continued to grow and has kept buying while the stock falters, delaying the inevitable hard landing because of AMC’s continued disastrous fundamentals and the Fed popping the market bubble with higher rates.

The latest example came last Tuesday when AMC pre-announced widening operating losses. Shares exploded double-digits pre-market. AMC cultists found a sliver of good news that the company is expected somewhat higher revenues. After a day or so of gains on decent volume, reality set in and the stock resumed its more recent decline.

With the COVID lockdowns, people literally had nothing to do than gamble their stimmie checks. Fed added unprecedented liquidity meaning buying stocks for a time was a no brainer. Throw in societal dysfunction — message boards replacing face-to-face communication — plus the very human tendency for confirmation bias, and you can get something like QAnon of stocks.

But people get hurt believing in stuff that defies rational thought , and the AMC cult is and will be no different. Eleanor Terrett of Fox Business listened in on a group call where one of the aforementioned Apes said: “To you new Apes … I know you all are red … I get it. I didn’t sell at $77 … I’m not selling now. I’ve lost enough to buy a house with cash.”

This gent said he bought in January so he’s still in the green for now. Many others won’t be so lucky because cults — not to mention pyramid schemes — never end well.