Jim Cramer Can't See GameStop Trading At $64 Or Even $44, Warns Against Meme Stock Mania: 'Responsible Move Is To Sell, Sell, Sell'

Zinger Key Points
  • There's no way meme stocks should be at such elevated levels on their own, says Cramer.
  • GameStop has gained 179% and AMC 135% so far this week amid logic-defying rallies.
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CNBC’s Mad Money host Jim Cramer has poked more holes in the new meme stock rally led by GameStop Corp. GME and AMC Entertainment Holdings, Inc. AMC after speculating over the possible issue of additional shares from both companies to shore up capital.

What Happened: “There’s no way these stocks should reach such elevated levels on their own merits,” Cramer said. He pointed out that GameStop’s market capitalization briefly reached $20 billion before settling around $15 billion.

“But people are buying and selling these stocks at these exotic levels. At the end of the day, it’s worth what they will pay for it,” he added.

Valuation Comparison: “I prefer to be a little bit more rigorous because I want something with staying power,” the Mad Money host said.

Cramer suggests comparing companies within the same industry to determine fair value. 

He highlighted Best Buy, Inc. BBY, with a $16 billion market cap (similar to GameStop’s peak), despite boasting significantly higher revenue ($43.5 billion compared to GameStop’s $5-$6 billion over the past four years).

See Also: Best Meme Stocks Right Now

Sell GameStop, AMC Outlook Differs: Cramer strongly advises selling GameStop, stating, “I can’t see Gamestop trading at $64 or even $44. The responsible move is to sell, sell, sell.” However, he views AMC differently. He acknowledged GameStop’s stronger financial position, including a recent profit and a healthy balance sheet.

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Cramer expressed concern about AMC’s heavy debt burden, particularly the $2.6 billion maturing in 2026. He noted their recent stock offering and warned of potential future dilution if the price keeps rising.  

“If the stock keeps climbing, AMC can sell more stock,” he said. “In the end, it’s a dead man walking. You are catching AMC in the walking phase.”

“Sell it before the dead man fails and you will do just fine.”

Price Action: Both stocks rose in premarket trading on Wednesday: GameStop by 2.42% to $49.93 and AMC by 1.61% to $6.96, according to data from Benzinga Pro. This week has seen significant gains for both stocks (GameStop +179%, AMC +135%), with trading halts punctuating the rallies.

Read Next: Macro Guru Raoul Pal Says Fresh GameStop-Led Meme Stock Frenzy Has Nothing To Do With Interest Rates

Photo: Courtesy of Scott Beale on Flickr

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