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Why is AMC stock up and what happened on Reddit?

AMC stock is on the rise again after investors on Reddit renewed their interest in the company.

Shares in the entertainment business first gained attention on the thread WallStreetBets.

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Shares in AMC Entertainment Holdings, which operates cinema chains across America, are listed on the New York Stock Exchange.

They recorded their eighth straight session of gains, according to Bloomberg, soaring 56% over that time.

The stock was up as much as 3.7% to $14.47 as markets opened in New York on Tuesday morning.

So why is AMC stock up?

First a word of warning: investing in stocks and shares is risky.

They can be volatile, meaning the price can go don as well as up leaving you with less money than you put in.

You should only invest money you can afford to lose as making money is never guaranteed when investing.

Why is AMC stock up?

AMC has been labelled a "meme stock" which means it captured the attention of a group of investors who are active online.

AMC shares first went up dramatically in January after being targeted by investors who were active on Reddit, along with shares in Gamestop.

The AMC share price fell back from this surge.

But now, amateur stock investors on Reddit have encouraged people to buy AMC shares again in a fresh push.

Their aim is to "squeeze" professional investors, who will lose money because they bet on the share price going down.

On Twitter the hashtag #AMCSqueeze has been trending.

AMC has last week raised $428million by selling shares in the company, giving it fresh cash to spend on the business.

Cinema chains are among the businesses which have closed because of the pandemic.

They are set to reopen again as more people are vaccinated and restrictions are lifted.

What happened on Reddit?

A campaign by amateur investors on Reddit and a forum there called WallStreetBets has pushed up the price of AMC stock this year.

They did this in January in an attempt to make hedge funds - which had bet on the AMC stock price falling - lose money.

"Short selling" is when professional investors borrow shares of stock to sell, and then buy them back at a lower price.

Essentially, when investors are doing this they are betting that the stocks will drop in value so they can pocket the profit when they hand them back to the company they borrowed them from.

They rely on the company failing, making it a risky way of raising cash - any positive news could see shares rising and cause them to make a loss.

Reddit users on the WallStreetBets thread encouraged individual investors to buy AMC shares to push up the price so these short sellers would lose cash.

The WallStreetBets Reddit group has several million members who share trading tips about how to beat "the system".

Reddit users have also helped push crypto markets to new highs.

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