CNBC’s Jim Cramer praised GameStop and AMC Entertainment for issuing new shares on Tuesday, saying that the move made Reddit investors uneasy.
The “Crazy Money” moderator targeted the “tight-lipped” investor group who received stock tips from Wall Street betting forums, saying they were unwilling to issue new shares and raise funds to improve their operations.
Kramer said: “If you care about the future of the company or the long-term trend of their stocks, then issuing shares here is the right move.”
He added: “You can only go so far.”
AMC hopes that shareholders will vote in May to authorize another 500 million shares to be sold on the secondary market. GameStop submitted a prospectus to sell no more than 3.5 million shares of common stock through its own stock offering plan.
AMC hopes to use the funds to improve its balance sheet, and the troubled GameStop executives are trying to design a turnaround story.
“AMC and GameStop need funding,” Kramer said. “Raising capital is good for both companies. In the long run, things that are good for the company should be good for the stock.”
As for the “stick to the end” strategy, Kramer fears that too many investors have unrealistic expectations that they will buy stocks in large quantities and force their stock prices to rise.
He said: “I found the whole narrative to be crazy.” “When the Wall Street betting team took over the flow of certain stocks, they wanted to call the shots and hoped that management and all shareholders would obey. Frankly speaking, this is what makes The secret to disappointment.”