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AMC stock has fallen slightly in value after investors on Reddit pushed up the price earlier this year.

The entertainment business first gained attention on the thread WallStreetBets.

AMC is the biggest cinema chain in America
AMC is the biggest cinema chain in AmericaCredit: The Mega Agency

Shares in AMC Entertainment Holdings, which operates cinema chains across America, are listed on the New York Stock Exchange.

The stock closed down 7.75% at $42.61 in the US yesterday evening.

In comparison, it hit its highest ever peak of $62.55 on June 2.

AMC's share price nearly doubled at the beginning of June after being pushed up by Reddit investors.

Below we explain why.

But first, a word of warning: investing in stocks and shares is risky.

They can be volatile, meaning the price can go down as well as up leaving you with less money than you put in.

You should only invest money you can afford to lose as making money is never guaranteed when investing.

Why did AMC stock go up?

AMC has been labelled a "meme stock" which means it captured the attention of a group of investors who are active online.

AMC shares first went up dramatically in January after being targeted by investors who were active on Reddit, along with shares in Gamestop.

The share price then dropped, only to rise again in May as amateur stock investors on Reddit once again encouraged people to buy AMC shares.

Their aim is to "squeeze" professional investors, who will lose money because they bet on the share price going down.

In May, AMC raised $428million by selling shares in the company, giving it fresh cash to spend on the business.

Last month, the share price of AMC soared again as the firm promised to give free popcorn to smaller investors.

It added that shareholders would also get access to special screenings and discounts.

Cinema chains in the US are starting to reopen again, after they were forced to close because of the pandemic.

Why is AMC stock now going down?

The price of AMC stock has started to fall following big rises earlier this year.

The value of an investment typically drops when investors sell off their assets.

The fall comes after news that more movies will be released on streaming sites sooner, leaving a limited amount of time for cinemas to be exclusive.

For example, Universal Pictures will make new releases available on the Peacock streaming service no later than four months after launch, according to Reuters.

Universal movies currently go to AT&T Inc's HBO TV channel and the HBO Max streaming service about six months after they hit cinemas.

What happened on Reddit?

A campaign by amateur investors on Reddit and a forum there called WallStreetBets has pushed up the price of AMC stock this year.

They did this in January in an attempt to make hedge funds - which had bet on the AMC stock price falling - lose money.



They rely on the company failing, making it a risky way of raising cash - any positive news could see shares rising and cause them to make a loss.

Reddit users on the WallStreetBets thread encouraged individual investors to buy AMC shares to push up the price so these short sellers would lose cash.

The WallStreetBets Reddit group has several million members who share trading tips about how to beat "the system".

Reddit users have also helped push crypto markets to new highs.

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