As Internet frenzy drives its stock price, AMC warns investors about the dangers of buying in

As with GameStop’s previous flash mob ascent, AMC’s wild ride is tied to pessimistic traders who believe that its shares will fall back down to Earth. AMC, given its weak earnings and high debt load, has drawn the attention of short sellers — investors who bet against a company and who stand to make money when a stock price falls. But in cases where the bearish bet fails to pan out, and the stock price rises, short sellers still have to cover their borrowed shares and are forced to buy the stock back at the higher price. This is known as a “short squeeze,” which can fuel a cycle of even higher prices, as short sellers buy more shares to mitigate their losses and drive prices up.