CNBC’s Jim Cramer argues that AMC Entertainment Holdings Inc. (NYSE:AMC) was doomed as a long-term investment because a debt-laden balance sheet severely restricted its ability to survive economic pressures, giving the movie theater chain an expiration date despite retail investor hype.
The Meme Stock Illusion
When retail investors aggressively bought into AMC Entertainment, framing the struggling theater chain as a massive comeback story, Cramer saw fundamental red flags. Instead of a sustainable recovery, the underlying financials pointed to imminent trouble.
“When the meme stock guys pushed AMC, the movie theater chain, as a turnaround play, I knew the stock would have a limited shelf life because the balance sheet was heinous,” Cramer explained.
He noted that the company “needed to borrow too much money to get back into growth mode.”
Debt for Growth vs. Debt for Survival
While Cramer cautions against holding heavily indebted companies—especially during periods of high interest rates—he acknowledges that not all corporate borrowing is toxic. The crucial difference lies in how a business utilizes its debt.
“That doesn’t mean I’m against all companies that borrow money. That would be absurd,” Cramer said. He highlighted industry leaders like Amazon.com Inc. (NASDAQ:AMZN) and Tesla Inc. (NASDAQ:TSLA), which “borrowed vast sums of money when they were getting started.”
Those bets paid off because “they both have massive opportunities in front of them.” In stark contrast, Cramer described AMC‘s financial situation as a company that was “borrowing money just to stay afloat.”
The Importance of Secular Growth
Cramer’s critique of AMC ties into his broader investing philosophy of finding “secular growth” stocks—companies that can deliver strong revenue year after year, regardless of the economic backdrop. A true secular growth business, he argues, does not depend heavily on constant financing.
To avoid falling into the same trap as the AMC turnaround narrative, Cramer advises retail investors to always “examine the balance sheet and the cash flows” before adding a speculative stock to their long-term portfolios.
How Has AMC Performed In 2026?
AMC shares were up 21.15% year-to-date, down 9.13% over the last month, and lower by 37% over the year. It closed 0.53% lower at $1.89 per share on Friday and was up 0.53% in the premarket on Monday.
Benzinga’s Edge Stock Rankings indicate that AMC maintains a weak price trend in the long term but a strong trend in the short and medium terms.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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