AMC (NYSE: AMC) stock price is very hot these days due to the ongoing lawsuit in Delaware Chancery Court. The ongoing speculation on the AMC and APE stocks is keeping the price action of both assets very volatile. The Wall Street analysts have also jumped in on the AMC vs APE issue.
Anticipating a conversion of AMC Preferred Equity Units (APE) into common shares, many traders are shorting AMC shares. This is because a potential conversion will theoretically mean a convergence of price for both stocks, but there’s a catch.
Citigroup Expects The APE Conversion To Go Through
According to the most recent AMC news, Citigroup believes that the conversion of APE to the common AMC shares will go through, and the prices of both assets will converge. Such a conversion will put downward pressure on AMC stock price, which is already facing headwinds.
After a strong surge in the first two months of the year, AMC stock is currently 49% down from its yearly peak. The arbitrage trading amid APE conversion has increased the selling pressure on the price. However, AMC is one of the stocks which has a history of massive short squeezes. This makes it a bad idea to short the stock without proper risk management.
AMC Stock Price Forecast July 2023
After a rebound at the end of June, NYSE: AMC is currently trading sideways after a brief pullback. The shares appear to be heading for a retest of the January 2023 lows which lie at $3.90. Such a retest is very likely in the coming weeks as the Delaware Chancery Court is set to issue its ruling.
For the past few days, APE stock has also been trading sideways. AMC stock price forecast is bearish as most analysts believe that the court will rule in favor of the conversion of preferred equity units to common shares.
In the meantime, I’ll keep sharing updated AMC stock price forecast and my personal trades on my Twitter where you are welcome to follow me.
