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Today's Markets: Meme stocks soar, Etsy buys UK app for $1.6bn

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June 3, 2021
  • End of England’s lockdown in sight 
  • Meme stocks rally in the US 
  • Etsy buys UK-based Depop for $1.6bn

After a rainy May, summer has hit June with a vengeance: yesterday meteorologists recorded the hottest day of the year so far. Few things matter more to the mood of the nation than the weather - but an (admittedly rare) sense of sunny optimism has been boosted by Prime Minister Boris Johnson, who said yesterday that he was upbeat about lifting remaining lockdown restrictions in England on 21 June, as initially planned. 

Johnson said that he could “see nothing in the data at the moment” that would prevent the government from following the roadmap out of lockdown. He did warn however that the extent to which the vaccine rollout would protect the UK against third wave was still unclear, and stressed caution. He is due to make a final decision on 14 June on whether lockdown will be fully lifted. 

 

AMC surges as meme stock rally continues

Shares in AMC Entertainment (AMC) almost doubled in value yesterday as the meme investing rally continues. Closing the day at $62.55, the Reddit-fuelled buying frenzy was so great that it triggered several trading halts.

The rally may have left hedge fund Mudrick Capital ruing its decision to cash out its holdings a day earlier.

On Tuesday, AMC announced that it had sold 8.5m new shares to Mudrick at $27.12 each, raising around $230m (£163m). The cinema chain said it would use the proceeds to repay debt, make acquisitions and upgrade its cinemas.

But according to Bloomberg, the hedge fund turned around and sold its stock on the very same day for a profit – albeit a much smaller one than if it had clung on a little longer.

Conventional wisdom would suggest that AMC will face a reality check at some point, but in the meantime, the sceptics are being squeezed. Prior to yesterday’s surge, S3 Partners estimated that short sellers were sitting on losses of almost $2.3bn so far this year.

With retail investors now owning more than 80 per cent of its issued share capital, AMC is leaning into the meme stock craze. It has launched a new ‘Investor Connect’ website to court its new shareholder base, offering exclusive screenings as well as free popcorn.

Meanwhile, Dogecoin rallied sharply yesterday after platform Coinbase (US:COIN) said it would allow its users to trade the joke cryptocurrency. The price of Dogecoin now stands at $0.43, at its highest level in around two weeks, according to Coindesk.

 

Etsy buys Depop for $1.6bn

And closer to home, online marketplace platform Etsy (US:ETSY) announced yesterday that it is acquiring UK-based app Depop for an enormous $1.6bn. The second-hand fashion app is popular among ‘generation Z’, with 90 per cent of its active users below the age of 26. The acquisition will grow Etsy’s market share in apparel, as well as in the second-hand market, which it forecasts will grow at a 39 per cent compound annual growth rate from 2019 to 2024 in the US. 

Read more of this morning’s top news in our blog below.