GameStop Shares Drop on Earnings Miss and Stock Sale

Game Stop

GameStop (NYSE:GME) shares dropped as much as 17% in early trading on Friday following the video game retailer’s disappointing quarterly results and a stock sale announcement, overshadowing a highly anticipated livestream from “Roaring Kitty,” the alias previously used by bullish retail investor Keith Gill.

For the first quarter, GameStop reported an adjusted loss of $0.12 per share, missing analyst expectations of a $0.09 loss. Net sales fell 29% to $882 million, below the forecasted $995.5 million. Wall Street had anticipated the quarterly results to be released later in the month.

Additionally, the company filed to sell up to 75 million more shares. Last month, GameStop sold 45 million shares, raising approximately $930 million.

These announcements followed a 47% surge in the stock during the prior session after “Roaring Kitty” scheduled a YouTube livestream for noon Eastern Time on Friday. This marks Gill’s first live appearance on the channel since his bullish videos and posts about GameStop helped spark the meme stock rally in 2021.

After the market closed on Thursday, “DeepF***ingValue,” a Reddit handle also associated with Gill, shared a screenshot purportedly showing the user’s portfolio ballooning to $586 million, including GameStop stock and unexercised options positions.

Earlier in the week, the same user disclosed a $175 million investment in GameStop, causing shares to rise following that post.

GameStop shares have experienced significant volatility over the past month as Gill reappeared on social media, leading to calls for an investigation into his activities. Loop Capital Markets managing director Anthony Chukumba commented to Yahoo Finance, “The fact that this individual bought short-dated call options on GameStop and then posted on social media—knowing it would drive up the stock price—is questionable.”

The top securities regulator in Massachusetts confirmed to Reuters earlier this week that it has launched a probe into “Roaring Kitty’s” GameStop trades.

Following Gill’s weekend reemergence, the Wall Street Journal reported on Monday night that executives at Morgan Stanley’s (NYSE:MS) E-Trade platform were considering closing an account linked to the screenshot. GameStop shares fell roughly 5% the next day. The stock had previously rallied 180% over two days in mid-May after “Roaring Kitty” posted on X, formerly known as Twitter, for the first time since 2021.

Analysts caution that the current meme stock action is not at the same level as the retail inflows seen three years ago, indicating a more subdued market response this time around.

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