AMC and Gamestop stock offerings are positive in the long term

CNBC’s Jim Cramer on Tuesday applauded GameStop and AMC Entertainment for issuing new shares – moves he said upset many in the Reddit investor crowd.

The “Mad Money” host took aim at the cohort of “keeping the line” investors receiving stock advice from the Wall Street Bets forum, saying their plans to offer new shares and raise cash to improve their operations shouldn’t be wrong. seen.

“If you are concerned about the future of any of the companies or the long-term trajectory of their shares, issuing shares here is the right move,” Cramer said. “But the ‘hold the line’ crowd hate these offerings … and they despise anyone who defends them.”

“It can only go so far.”

AMC expects shareholders to vote in May on a measure authorizing the sale of another 500 million shares on the secondary market. GameStop submitted a prospectus to sell up to 3.5 million common shares in its own share offering program.

AMC hopes to use the funds to improve its bottom line, while GameStop executives seek to craft a story of change.

“AMC and GameStop need money,” Cramer said. “Raising capital is good for both companies, and in the long run, what is good for the company should be good for stocks.”

As for the “keep the line” strategy, Cramer worries that too many investors have unrealistic expectations that they could pile up on a stock and force their share price to rise.

“I find this whole narrative crazy,” he said. “When the Wall Street Bets cohort takes over the flow of certain stocks, they want to make the decisions and they expect management and all shareholders to obey. Well, frankly, that’s a recipe for disappointment.”


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