GameStop (NYSE:GME) unexpectedly posted first-quarter results, and the news wasn’t good. GME stock is down 19% in pre-market trading.
The video game chain, which has become a meme stock thanks to Roaring Kitty, saw a decline in sales and foot traffic. The company lost $32.3 million, 11 cents per share, on sales of $882 million. A year ago, GameStop lost $50.5 million, 17 cents per share, on sales of $1.24 million.
The results had been expected on June 17. They were moved up because of the stock’s volatility.
In addition to reporting negative results. GameStop said it will sell an additional $30 million in stock. This is on top of 45 million shares offered in May, aimed at raising $900 million.
Game Result?
After rising 46% on June 6, the shares plunged overnight. The market cap fell below $14 billion. Shares were selling at about $39 each as I began writing but were falling fast.
The earnings came out as Roaring Kitty himself, whose name is Keith Gill, scheduled a livestream for noon Eastern on YouTube, intending to boost the stock. About 10,000 were already planning on attending.
Gill hosted similar shows in August 2020, boosting GameStop.
Gill said last Sunday he had 120,000 call options on GameStop that can be exercised at $20 each. That means he’s still in the money as trading opens. Exercising his options would bring Gill’s stake in the company to 17 million shares.
GameStop can’t blame a weak economy for the results. The U.S. non-farm payroll number for May came in at 272,000, much higher than expected.
In the 2021 meme stock rally, Chewy (NASDAQ:CHWY) co-founder Ryan Cohen wound up with a huge stake and eventually became CEO. Analysts are now welcome to speculate on Gill’s fate in the latest run-up.
GME Stock: What Happens Next?
It seems GameStop is anxious to end the game before it goes much further. One trader called its announcement a “checkmate” play. Gill needs $240 million in cash to exercise his options, which could cause forced liquidations on GameStop and other stocks.
Still. Are you not entertained?
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
