In the midst of a global pandemic that has driven most of us indoors to the privacy and convenience of the couch in front of the TV for our entertainment fix, you’d be crazy to invest in a movie theatre company, right?
Well, maybe not.
Witness the 3000% surge in the share price this year of AMC Entertainment Holdings, the largest movie theater chain in the world, fueled by the rush of retail investors into so-called “meme stocks” — unlikely, apparently failing companies buoyed by a frenzied fan base on social media channels such as Reddit and Twitter.
Look Before You Leap
AMC joins the likes of Bed Bath & Beyond, BlackBerry, and GameStop in a speculative buying spree akin to the stock market mania of the dot-com era bubble, a time which saw an “Average Joe” attempt to profit from trading stocks that appear to be a surefire way to get rich quickly. But is it worth the risk and what do you need to know about day trading before you jump in?
While it is essential to choose a well-vetted day trading platform, buying and selling stocks single-handedly between market open and close requires a high degree of specialized research, patience, and clear-headedness; it can be a difficult experience and is not for the emotional or feint-hearted. To succeed in this game, one needs to make careful judgements between risk and reward, control adequate capital for trade, andperhaps most importantly devise a strategy and a plan to trade.
A New Generation of Equities Investors on the Move
“What you’re seeing is an entire generation become engaged,” online brokerage pioneer and former options trader Tom Sosnoff told CNBC News recently. “So instead of waiting until they’re 50 or 60 and trying to figure out what the markets are all about, they’re doing it when they’re 22 or 23. This is a generational move,” he says.
A word for the wise investor, however, is caution. Remember the old adage that “if something seems too good to be true, it’s probably because it is.” AMC’s phenomenal share climb is defying expectations, spurred perhaps by amateur investors taking a gamble. According to data compiled by Bloomberg, all nine Wall Street analysts who cover the stock do not recommend buying it, while four have it as a sell rating, with their price target between $1 and $15 — that’s a far cry from the $50 to $60 price it is currently commanding.
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