Just because the business of AMC Entertainment (NYSE:AMC) remains fundamentally unchanged doesn’t mean that AMC stock should stagnate. That much was proven to be true on May 28, when the “meme stock” rocketed upward again, reaching a high of $36.72.

However, this particular run up in AMC stock was fundamentally different from what happened earlier in the year. Mostly, I’m not so sure it makes any sense. After all, this company’s troubles aren’t magically disappearing.

According to Barron’s, the May 28 run up in the stock was the result of purchases made by retail buyers, as opposed to short sellers closing their positions. As Ihor Dusaniwsky of short-selling analytics company S3 Partners noted, “This run up is really long buying and selling.”

That seems to indicate that those retail investors have some sort of belief in AMC on a fundamental level. In my estimation, that means those investors believe that something positive happened recently — or will happen soon. 

AMC Stock and Recent Earnings

AMC released earnings back on May 6. Based on management’s assessment of the current situation, AMC is indeed in a precarious position. The company is well aware that attendance levels will make or break it financially. Management lays out the scenario bluntly in the latest 10-Q (Page 34): 

“This [continued operation without legal debt restructuring] requires that we achieve significant increases in attendance levels beginning in the third quarter of 2021 and ultimately reaching approximately 85% of pre CoVID-19 attendance levels by the fourth quarter of 2021 and through the first and second quarters of 2022 as the vaccine rollout continues and more Hollywood product is released in our theatres.”

Right now, AMC is at a point where its ability to comply with debt covenants, liquidity requirements and other obligations is in serious doubt. That 85% attendance goal is where it hopes to be. And, legal debt restructuring is a nicer way of saying bankruptcy. Holders of AMC stock are not holders of preferential debt. As the same 10-Q warns, “holders of our common stock and other securities would likely suffer a total loss of their investment.” 

So, clearly this shouldn’t have caused retail investors to rush in and cause a run up. 

Is It the Reopening?

That said, AMC actually had more screens open at the end of Q1 2021 than it had at the end of Q1 2020. That was true both in the U.S. and internationally. Yet, revenues remain a real issue. The company recorded an 84.2% decrease in total revenues in Q1 2021 relative to Q1 2020. 

So, it doesn’t seem that retail investors should have been interested in AMC stock based on that statistic. In fact, if Dusaniwsky is correct in claiming that long buying and selling caused the run up, it does seem difficult to identify what made buyers so interested. 

I’d also like to point out an ironic truth about AMC’s current troubles. Despite the fact that firmwide revenues were down 84.2%, the company actually fared better from a net loss perspective. In Q1 2020, AMC posted a $2.18 billion loss. In Q1 of 2021, however, that figure was only $567.2 million.

Still, it doesn’t seem that investors decided to rush in en masse based on anything in the recent 10-Q. 

AMC Stock: Just Memes

Rather, it seems that most of the action is attributable to Twitter (NYSE:TWTR), Reddit and meme-stock mania. Indeed, InvestorPlace contributor William White recently wrote a piece highlighting several hashtags that were passed around at the time of the run up. This trending seems to be what drove the retail action. 

Of course, I’m happy for those #AMCAPES that remained #AMCSTRONG and made money. I just don’t think that you should attempt to do so, too.  

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.