Famous short seller Jim Chanos told CNBC on Tuesday that he has a small bet against AMC Entertainment , the movie theater company that became a volatile meme stock in 2021. Chanos, founder of Kynikos Associates, told CNBC's " Squawk Box " that he has "a small put position" against the stock that is less than 1% of his fund's net assets. A put is a type of option that allows traders to bet that a stock will fall. Notably, a put option is less risky than a true short position, which has a theoretically unlimited potential loss. Retail traders, including those on Reddit forum WallStreetBets, targeted stocks like AMC and GameStop that had high levels of short interest – that is, they had a high number of shares that were sold short – earlier this year in an attempt to squeeze hedge funds. AMC's short interest has since declined significantly. On Monday afternoon, AMC reported a smaller-than-expected loss for its second quarter , and revenue also topped expectations. The stock rose in premarket trading Tuesday. However, Chanos said that beating low expectations didn't change the long-term outlook for the company, pointing toward the dramatic decline in box-office sales this year compared with pre-pandemic numbers in 2019. The lower total theater business, combined AMC's high fixed costs and debt, will keep the company from making money in the future, he said. "There's just no way they can be profitable," Chanos said. Shares of AMC were trading under $3 at the start of the year, but closed at $33.80 on Monday. Chanos pointed out that the rise has come as Wall Street analysts' estimates for AMC's 2021 business have declined. "The reality is things have gotten worse at this company since the depths of the pandemic. And so clearly, again, something has changed, and I think that change is streaming," Chanos said. To be sure, AMC executives said during an earnings call Monday that cash flows from theaters could turn positive in the fourth quarter and that the company should be profitable if the box office can return to near its pre-pandemic level. "We are not taking a victory lap. … We are still losing money; we are still burning cash," AMC CEO Adam Aron said during the earnings call Monday. "But we can see a light at the end of the tunnel." -- CNBC's Sarah Whitten contributed to this report.
Scott Mlyn | CNBC
Famous short seller Jim Chanos told CNBC on Tuesday that he has a small bet against AMC Entertainment, the movie theater company that became a volatile meme stock in 2021.