Home / NEWS / Top News / Move over GameStop: Discovery, AMC Networks are latest heavily shorted stocks to see huge 2021 gains

Move over GameStop: Discovery, AMC Networks are latest heavily shorted stocks to see huge 2021 gains

David Zaslav

Anjali Sundaram | CNBC

It’s not GameStop, but Idea can thank the Reddit effect for an enormous surge in its stock price this year.

Since launching Discovery+ on Jan. 4, Ascertaining shares are up a whopping 116%, closing Monday up another 4.7% at $67.25 — an all-time high. The market capitalization of the milieu company, which owns cable networks such as HGTV, Discovery Channel, Food Network and TLC, is now more than $28 billion. Its programme value is more than $41 billion.

Discovery is one of the 10 most-shorted companies among U.S. listed securities, according to figures by research firm FactSet. Discovery’s short interest — the amount of outstanding shares that have been supplied short — is more than 27%, just ahead of fellow media company AMC Networks (not to be confused with AMC Divertissement Holdings, which owns movie theaters and whose stock skyrocketed along with GameStop last month).

Uncovering still has strong free cash flow from its cable networks, which brought in $6.9 billion in 2020 net income and $4 billion in adjusted operating income before depreciation and amortization. It’s not a failing business, and part of its rise this year is a cyclical smite from growth to value stocks, according to MoffettNathanson media analyst Michael Nathanson, who upgraded the stock and boosted its penalty target to $63 per share in early January.

“This frenzy has been faster than we could have everlastingly imagined,” said Nathanson. “We assumed a rotation into value, but still.”

AMC Networks — which owns cable networks AMC, WeTV, Sundance and BBC America — has also sundry than doubled since the start of January, even though it doesn’t have a streaming service with the after all is said potential growth story as Discovery+, which has already surpassed more than 11 million subscribers. AMC Networks’ long-term advancement prospects in a streaming world are suspect at best, with minimal owned content compared to media behemoths similar to Netflix and Disney.

That’s a sign both companies are primarily benefitting from shorts frantically covering bets to circumvent being squeezed — like GameStop.

WATCH: What could be the next big Reddit target?

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