The value of GameStop’s stock continued to decline on Wednesday after the video game retailer—often the focus of meme stock trading since a viral 2021 rally—reported a decline in sales, dropping the company’s market capitalization by $2 billion.
The video game retailer said it would sell 20 million shares to fund future investments and ... [+]
Shares for GameStop fell by over 14% to below $20 as of 2:40 p.m. EDT, adding to a 3.3% loss on Tuesday.
As of Wednesday’s share price, GameStop’s market cap has dropped to $8.5 billion from $10.5 billion.
GameStop reported $798 million in net sales through its second quarter, down 31% from the same period last year ($1.1 billion) and below analyst estimates of $896 million, according to FactSet.
Despite a decline in sales, the company reported adjusted earnings of 1 cent per share, beating out estimates of a loss of 9 cents per share.
GameStop also announced a plan to sell up to 20 million shares, which the retailer said would be used for “general corporate purposes” that include funding for future unspecified acquisitions and investments, and will reportedly identify stores to shut down.
Michael Pachter, an analyst at the investment firm Wedbush Securities, criticized the game retailer in a note Wednesday and said “without a hint of any strategy” by GameStop to use its assets, it would be “reasonable” for the company to instead “close all of its stores and operate as a bank.”
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GameStop has suffered financially since the pandemic, as many consumers shift away from physical stores and toward digital transactions. The company joined other meme stocks like AMC and rallied in 2021, as social media users piled money on struggling brick-and-mortar chains—in GameStop’s case, driven in part by a backlash against heavy short-selling. GameStop shares have been volatile since then, by almost 90% within a month of reaching an all-time high. Meme stock trader Keith Gill’s social media return earlier this year—after helping to drive the 2021 rally—sparked another run for GameStop shares, after the trader said he was a “believer” in the company as he announced a $160 million position. Despite an initial surge, including a livestream hosted by Gill that drew more than 600,000 viewers, interest quickly slowed down as GameStop shares fell by 40% in the month after reaching its intraday high this year. GameStop CEO Ryan Cohen said in July the company would not “make promises or hype things up” as meme traders invested in the company again, sending shares down as much as 11%.
69%. That’s how much the value of GameStop’s stock has decreased since hitting an intraday high of $64.83 on May 13. At the time, GameStop shares surged following the return of Gill—known as “Roaring Kitty”—to social media after a three-year hiatus. Gill previously spearheaded a rally for GameStop during the pandemic, when GameStop’s stock peaked at nearly $121 during intraday trading in January 2021.