Short-seller says AMC's fundamentals are obvious and that the meteoric run in the theater operator's stock is nearing an end

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Short-seller says AMC's fundamentals are obvious and that the meteoric run in the theater operator's stock is nearing an end
Igor Golovniov/SOPA Images/LightRocket via Getty Images
  • Short-seller Iceberg Research revealed a short position on AMC Friday.
  • Iceberg told Insider that AMC's current stock price, hovering around $50, has been unsustainably inflated.
  • Iceberg made headlines for knocking 99% off the share price of a commodity trader once worth nearly $12 billion.

Iceberg Research revealed a short position on AMC on Friday, staking out a claim against one of the buzziest retail stocks to date.

Arnaud Vagner, the main short-seller behind Iceberg, told Insider that AMC's current stock price, hovering around $50, has been unsustainably inflated by call options activity in the already-tough theater business.

"The volatility of the meme stocks is largely driven by call options, and their 'gamma squeeze effect,'" Vagner said - referring to a situation where a stock's sharp price increase forces market makers to buy more shares, accelerating the stock's ascent.

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"However, this effect is temporary and the correction is inevitable. The volume of call options has substantially declined," he added.

In a series of tweets announcing the short, Iceberg described the AMC "pump" as "increasingly shaky," calling the weaker fundamentals of AMC "obvious."

"We don't accuse the company of fraud. There is a price for everything and we believe the pump has exceeded its average life," Iceberg tweeted.

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In previous years, Vagner's Iceberg made headlines for knocking some 99% off the share price of Noble Group, a big commodity trader once worth nearly $12 billion, after Iceberg alleged massive accounting fraud.

More recently, the short-seller released a report in April on Diginex, a crypto exchange that went public via SPAC, alleging corporate governance "red flags" and noting the founder had sold 96% of his shares. Since the morning of the report, Diginex shares have fallen 38%.

AMC stock has undergone a disorienting run-up in recent months. After spending 2020 in the single digits, it has skyrocketed to as high as $72.62 in early June. AMC was trading at $49.40 as of 12:45 p.m. ET.

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