GameStop stock tank moves towards stock issue, quarterly sales decline

GameStop stock (GME) rose on Friday after the company filed to sell 45 million new shares of its common stock and released preliminary financial results that revealed a significant drop in revenue for the most recent quarter compared to a year earlier. It fell as much as 30% on Friday.

The video game operator said it expects first-quarter revenue to be in the range of $872 million to $892 million, down from $1.24 billion in the year-ago period. Wall Street had expected sales of just over $1 billion for the quarter, according to Bloomberg data.

Following Friday's decline, the stock is now below its Monday morning opening price following Keith Gill, also known as “Roaring Kitty,” reappearing on X (formerly Twitter) over the weekend.

Mr. Gill's bullish case against GameStop ignited a rally in meme stocks in 2021, with the stock more than doubling by Tuesday morning.

“I don't see anything in the pre-announcement that indicates business is picking up,” Wedbush managing director Michael Pachter told Yahoo Finance. “But even if we actually keep failing and trying to find new strategies, we'll still be able to raise enough money to survive for at least three or four more years.”

The company noted in a filing that since January 2021, when Meme's share price rally first began, its stock price has been subject to “extreme price fluctuations” that are decoupled from business fundamentals.

GameStop added that investors purchasing its stock “could lose a significant portion of their investment” if prices continue to decline.

The common stock sale application follows a mixed shelf offering filed earlier this morning, which allows the company to issue common stock, preferred stock and other securities.

GameStop's move to sell stock coincides with an announcement from fellow meme stock operator AMC Entertainment (AMC). The struggling theater chain raised $250 million in “new equity capital” on Monday through the sale of 72.5 million shares, according to an SEC filing.

AMC stock has also been sold since the announcement. AMC is up about 50% in the past week after rising more than 200% at its peak.