Jim Cramer Sounds Alarm Bell, Advises Investors To Take Profits As GameStop, AMC Shares Soar: 'There's Nothing There'

Shares of original meme stocks GameStop Corp GME and AMC Entertainment Holdings Inc AMC are surging again and Jim Cramer believes he knows what’s coming next.

What To Know: Keith Gill, also known as “Roaring Kitty” on YouTube and X or “DeepF***ingValue” on Reddit, posted a screenshot on Reddit over the weekend suggesting he currently has a $116 million position on GameStop.

The image showed a pair of unconfirmed bullish positions, including 5 million shares of the video game retailer and 120,000 call options expiring later this month. GameStop shares spiked in early trading Monday, sparking a rally in several meme stocks and high short-interest names such as AMC.

Monday on CNBC’s “Squawk On The Street,” Cramer suggested piling into the meme names to try to catch a piece of the rally are likely going to get burned.

GameStop is well capitalized, but video games can easily be bought and downloaded without having to go to physical retail locations and the company hasn’t provided a clear mission moving forward, Cramer said.

“Let’s say you bought the stock right here — hold your ears, people who hate me — you should take profits because there’s nothing there,” Cramer said.

See Also: Roaring Kitty’s New Social Post Pushes GameStop-Themed Crypto By 200%, Kitty-Themed Coins Surge

Cramer explained that he believes GameStop is dealing with a “declining situation” and needs to raise more capital so the company can transform its business. However, the GameStop situation doesn’t look as dire as some of the other meme names, he said.

“GameStop’s business is not great. AMC’s business is bad,” Cramer said. “AMC will probably be ready to sell more stock because their balance sheet is still horrible,” he said.

AMC isn’t getting as big of a lift as GameStop on Monday, which may be partly due to the repeated dilution brought on by management. AMC has diluted shareholders several times in recent years in order to reduce some of its long-term debt.

Last month, AMC announced it raised approximately $250 million of new equity capital through the sale of 72.5 million shares through a previously disclosed at-the-market equity offering. The company also entered into privately negotiated exchange agreements to issue over 23 million shares in exchange for $163.85 million worth of notes due 2026 after the stock popped following Gill’s first post on social media in more than three years.

“I don’t think they can avoid a difficult period of their existence without selling some stock,” Cramer said.

AMC will hold its annual shareholder meeting on Wednesday. The company is not due to report earnings again until sometime in early August. GameStop recently scheduled its first-quarter financial results for June 11.

GME, AMC Price Action: At the time of publication Monday, GameStop shares were up 24.29% at $28.76 and AMC shares were up 10.47% at $4.80, according to Benzinga Pro.

Don’t Miss: Roaring Kitty’s GameStop Resurgence: Why GME Could Be Poised For More Gains

Photo: Shutterstock.

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