GameStop and AMC are two of the most popular companies among retail investors. But which stock is the better investment?

This year, GameStop and AMC Entertainment are down around 28% and 70%, respectively.

Capital Structure: GME vs. AMC Stock

GME Stock

First, consider GameStop (NYSE:GME). The video game store presently has $908 million in cash on hand. It’s also almost debt-free.

Last year, GameStop raised most of its capital via a massive $1.67 billion share offering.

The business leaders took advantage of the sky-high value and increased their reserves.

As a result, GameStop could pay down virtually all of its existing debt while still holding around $1 billion in cash.

Nonetheless, GameStop isn’t happy to sit still. The business intends to put its cash to use by increasing fulfillment capacity and progressing its digital-focused turnaround strategy.

As a result, GameStop’s sizable cash reserve will provide some additional cushioning if macroeconomic circumstances worsen.

GameStop utilized around $380 million in cash to sustain its operations last quarter. This is a 15% decrease from the previous quarter, but the situation has to improve much more. At this rate, GameStop might jeopardize its financial sheet and potentially run out of cash as early as next year.

AMC Stock

AMC Entertainment (NYSE:AMC)  on the other hand, has a more convoluted balance sheet condition. AMC has a large debt burden of around $10.4 billion and a cash position of $904 million.

In other words, the company’s liabilities outnumber its assets.

Despite having a large debt, the movie theater company has maintained a steady liquidity position. AMC issued additional shares in January and June 2021, respectively. The June issuance program produced about $587.4 million in cash flow for the corporation. AMC was able to escape bankruptcy as a result of this.

Technical Evaluation

Even though there are several reasons to be cautious about meme stocks and other highly speculative assets, market enthusiasm might soon spark additional rallies in GameStop and AMC.

Both remain among the most searched stocks on Google and the most talked tickers on social media sites, surpassing large tech companies like Apple (NASDAQ:AAPL) and Tesla Inc.(NASDAQ:TSLA)

Comparing the two equities reveals that sentiment against AMC is more unstable than feeling toward GameStop.

This is because AMC stock has fallen 70% year to date, compared to 30% for GME stock.

Both GameStop and AMC have short-term and long-term negative positions, according to Simple Moving Average (SMA) analysis, which gauges the average price of a stock over a set time.

However, according to the money flow index, AMC now has a money flow index of 36, suggesting a propensity to be oversold based on the share price and trading volume data over the previous 14 days. GameStop is at 50, which means it is neither overbought nor oversold.

As a result, GameStop seems to have the superior stock of the two.

Featured Image-  Megapixl @ Rafaelhenriquepress

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