(Bloomberg) -- AMC Entertainment Holdings Inc. rose for a second day and Wendy’s Co., the latest addition to the retail-trader frenzy, climbed to a record amid a broader rally in meme stocks.
Shares of the theater chain rose as much as 10%, adding to Monday’s 15% gain and continuing what’s been a wild ride for investors. Wendy’s jumped as much as 19% to notch a record as the fast-food restaurant operator gained traction on social media, including several touts on Reddit’s WallStreetBets forum. So-called meme stocks broadly gained Monday.
Clover Health Investments Corp. also rallied as it was among the most mentioned companies in Stocktwits over the last day. The Chamath Palihapitiya-backed health insurer surged as much as 59%, the most ever, after Monday’s 32% advance. Clover Health short interest as a percentage of float is about 42%, data from financial analytics firm S3 Partners show.
“The power of the network effect of social media entices more people to get involved, so then they start broadening their horizons, looking for other names that have high short interest and things like that,” said Michael O’Rourke, chief market strategist at JonesTrading.
GameStop Corp., the original icon among retail traders, surged as much as 21% to the highest in almost three months ahead of quarterly earnings results, which are expected Wednesday.
MKM Partners analyst Eric Handler said in a note Tuesday that AMC should focus on debt reduction with its newly raised capital rather than acquisitions. He rates the stock sell with a $1 price target.
“Management has been gifted an unforeseen opportunity from the recent wave of (fanatical) retail investor momentum, which has pushed the shares far above historical valuation levels,” Handler wrote.
AMC company insiders have continued to take advantage of the stock’s run-up in price. Board member Howard Koch Jr. divested more than $790,000 of shares on Monday, according to a filing with the U.S. Securities & Exchange Commission. Last week, AMC executives and directors sold $8 million in shares.
Several other meme stocks rose Tuesday. Virgin Galactic Holdings Inc. gained as much as 9.4%, Naked Brand Group Ltd. rose 8% and BlackBerry Ltd.’s U.S.-listed shares advanced 7%.
(Updates share moves throughout; adds strategist comments in fourth paragraph and GameStop results details in fifth.)
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