One of the most incredible short gatherings we’ve seen in modern history has to go to AMC Entertainment (NYSE:CMA). This movie theater chain has grown from around $2 per share in December 2020 to over $70 per share in mid-2021. Of course, AMC stock has since given up most of its gains, as have other meme stocks like GameStop (NYSE:EMG).
Today, AMC stock is down 11% at the time of writing. Most of the leading stocks that fall into the higher risk, higher reward buckets also underperformed significantly today. A series of market-related headwinds are dragging most stocks down as investors brace for what appears to be a long fight against inflation.
Today, bond yields hit their highest levels since the start of the pandemic. Additionally, the yield curve has flattened to its smallest margin since the start of the pandemic, signaling concerns about future economic growth.
Thus, the economic outlook for the future is rapidly changing from a rosy hue to a rather ugly tone. Sentiment is starting to turn bearish with investors finding exits on some trades in a big way.
Let’s dive into what’s behind AMC’s move today.
AMC shares sink with other speculative assets
Perhaps the most speculative bubble we have seen form in the past year is in short-term equities. Yes, AMC and GameStop have been spending their time in the sun. However, there is every indication that investors are looking to aggressively de-risk their portfolios at this time. With a rotation from growth to value, there seems to be little room for short-term speculative betting at this time.
This does not mean that all retail investors are in the same boat. Today, #AMCNONLEAVING is trending on Twitter, suggesting that retail investors aren’t necessarily done battling the forces of evil (i.e. hedge funds). That said, the extent to which this battle has already been won, with some hedge funds going out of business and others suffering massive losses, is certainly worth considering.
If this recent rotation from risk aversion towards more defensive stocks continues, it’s entirely possible that AMC stock still has a long way to go. After all, investors need to be reminded that this was a $2 stock just over a year ago. Currently trading around $18 per share, AMC may have a long way to go. Don’t tell people on Twitter, though.
As of the date of publication, Chris MacDonald had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.