#Reddit the great war series#

For managers, this follows a common business-school logic. To capitalize on its retail investors, the company has issued new stock to boost its market cap from $5 billion at the start of April north of $22 billion as of Wednesday. The video game retailer has only issued 3.5 million through a new offering in April-a measly figure compared to AMCвЂ™s 100 million new shares.ДЄMC has gone all-in on the meme. GameStop has always been coy about its success, vague about its corporate strategy, and loath to issue new shares. The two main beneficiaries of the meme stock craze have taken opposite approaches to capitalize on this. In a short squeeze, investors buy up stock, raising share price to the point where short-sellers - who are betting against the stock price appreciating - need to buy the stock to cover some of their losses, which can send the price even higher. The traders, who mostly gathered on the subreddit WallStreetBets and related Discord servers, felt the stocks were undervalued by Wall Street short-sellers.

#Reddit the great war series#

Retail investors, operating largely on Reddit and Discord communities dedicated to investing, pulled off a seismic feat this winter by orchestrating a series of short squeezes on ailing companies including GameStop and AMC. GameStop and AMC have been the prime beneficiary of the meme stock craze. For a few high-profile stocks, historic roles have reversed: Individual traders coordinating online, armed with commission-free trading accounts, can supersede the wishes of management and institutional investors. Such a concession signals a major change in AMCвЂ™s corporate trajectory-and perhaps for other corporations now in thrall to retail investors like never before. The AMC CEO openly acknowledged the retail investorsвЂ™ desires, tweeting that he didnвЂ™t want to proceed with вЂњsplitвЂќ shareholder sentiment by asking for the vote, a vote he likely would not win since all shareholders can (and perhaps will) vote their preferences online: But Aron conceded to Reddit tradersвЂ™ wishes on Tuesday. They think that short-sellers on Wall Street will soon have to buy back their shares for a loss, driving the price even higher.ДЄ typical company might brush off such demands. Meme traders voiced their opposition on Reddit to the new stock issuance to execute another short squeeze and drive the price up higher. And these investors appear to have assumed decisive control over the companyвЂ™s decisions. Many of them are activist investors themselves who organized on Reddit communities, called subreddits. Retail investors, who led AMCвЂ™s recovery in recent months, hold more than 80% of the companyвЂ™s shares, dwarfing the stakes of institutional investors.

Retail investorsвЂ™ voting power retail is typically so diluted that it rarely factors into management decisions. In the US, the 10 largest institutional investors, like hedge funds or endowments, make up 43% of the average public companyвЂ™s ownership. Retail investors seldom have any say because institutional investors are often in control. Normally, this would not be a big ask, especially if Wall Street agrees that a stock is overvalued.

To get around the barrier, CEO Adam Aron has asked shareholders to approve 25 million new shares.

With 513 million shares outstanding, AMC can only issue 11 million new shares before hitting its self-imposed ceiling. AMC faces a roadblock as the companyвЂ™s corporate charter only allows it to issue 524 million shares of common stock.