The AM Canum Venaticorum stars are rare interacting white dwarf binaries, whose formation and evolution are still poorly known. The Sloan Digital Sky Survey provides, for the first time, a sample of 6 AM CVn stars (out of a total population of 18) that is sufficiently homogeneous that we can start to study the population in some detail. We use the Sloan sample to `calibrate theoretical population synthesis models for the space density of AM CVn stars. We consider optimistic and pessimistic models for different theoretical formation channels, which yield predictions for the local space density that are more than two orders of magnitude apart. When calibrated with the observations, all models give a local space density of 1-3x10^{-6} pc^{-3}, which is lower than expected. We discuss the implications for the formation of AM CVn stars, and conclude that at least one of the dominant formation channels (the double-degenerate channel) has to be suppressed relative to the optimistic models. In the framework of the current models this suggests that the mass transfer between white dwarfs usually cannot be stabilized. We furthermore discuss evolutionary effects that have so far not been considered in population synthesis models, but which could be of influence for the observed population. We finish by remarking that, with our lower space density, the expected number of Galactic AM CVn stars resolvable by gravitational-wave detectors like LISA should be lowered from current estimates, to about 1,000 for a mission duration of one year.
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