Jim Cramer says investors should sell their GameStop and AMC shares

Jim Cramer says investors should sell their GameStop and AMC shares

The stock market has been in a frenzy recently, with two stocks, in particular, grabbing the attention of investors – GameStop (GME) and AMC Entertainment (AMC). These companies have seen a remarkable surge in their share prices, driven primarily by social media hype and a phenomenon known as "meme stock mania." However, CNBC's esteemed editor and financial commentator, Jim Cramer, has warned investors to exercise caution and consider selling their shares in these two companies [1].

Jim Cramer's rationale for his sell recommendation is rooted in the irrationality of these stocks' valuations. He believes that the current market prices do not reflect the fundamental value of these companies. In contrast, he compares GameStop to its more established competitor, Best Buy (BBY), highlighting Best Buy's stronger business fundamentals and more stable financials [1].

As for AMC, the situation is more dire. Despite recently raising $250 million through the sale of new shares, Cramer warns that the company could run out of money by 2026 due to its significant debt obligations [1]. He characterizes AMC as a "dead man walking" and advises investors to sell before the company reaches a more precarious financial position.

Moreover, Cramer suggests that both GameStop and AMC could use their current market momentum to issue new shares to capitalize on the ongoing frenzy [2]. While this strategy could provide short-term gains for these companies, Cramer questions whether it would be beneficial in the long term.

In conclusion, while the meme stock rally may continue to drive up the prices of GameStop and AMC, investors should exercise caution and consider Jim Cramer's advice to sell their shares in these companies. Their current valuations do not reflect their fundamental value, and their financial situations are precarious at best.

References:
[1] CNBC. (2023, March 14). Cramer warns against meme stock mania, says to sell GameStop and AMC. https://www.nbcboston.com/news/national-international/cramer-warns-against-meme-stock-mania-says-to-sell-gamestop-and-amc/3369299/
[2] Benzinga. (2023, March 14). Jim Cramer Bets Cash-Strapped AMC, Gamestop May Issue Shares to Capitalize on New Meme Stock Mania. https://www.benzinga.com/analyst-ratings/analyst-color/24/03/38815078/jim-cramer-bets-cash-strapped-amc-gamestop-may-issue-shares-to-capitalize-on-new-meme-stock-mani