June 12, 2024


GameStop

Photo: Shelby Knowles/Bloomberg (Getty Images)

GameStop stock plunged more than 26% after the company disclosed that it expects a large drop in sales for this year’s first quarter and will be selling off millions of shares — bringing what many hoped would be a major revival of the 2021 meme stock rally to a grinding halt.

The video game retailer disclosed in regulatory filings Friday that it’s projecting quarterly sales to drop to $872-$892 million, down from $1.24 billion in the same quarter last year. GameStop also projected net losses between $27 million to $37 million for the quarter, an improvement from $50.5 million in losses a year earlier.

In a separate filing, GameStop announced that it is planning to sell up to 45 million additional shares of its class A common stock, but warned that investors who purchase shares of GameStop in the offering could lose a “significant portion” of their investments due to the stock’s “extreme price fluctuations.”

GameStop shares traded at $20.36 each on Friday afternoon.

GameStop stock soared earlier this week following the apparent return of investor Keith Gill, better known as “Roaring Kitty.” After Gill made a cryptic post on X on Sunday that fans interpreted as a sign to begin trading GameStop stock again, the company’s shares closed nearly 75% higher on Monday. AMC and a handful of other stocks also caught the tailwinds of the renewed meme stock frenzy.

Meme stocks are company shares that become wildly popular online and are hotly traded by investors, most of them individual rather than institutional, causing a surge in share price regardless of the company’s actual performance. (They also pose a massive headache for hedge funds and other short-sellers, who make money by betting against stocks.)

While the early 2021 meme stock rally led by Gill sent GameStop’s shares skyrocketing 1,000% in a matter of weeks, the response was shorter-lived and more muted this time around.

Shares of GameStop began to sink on Wednesday and continued on a downward trend during the second half of this week, as the meme stock excitement seemed to fizzle as quickly as it started.



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