(Reuters) – GameStop shares fell more than 18% before the bell on Wednesday. That's as the brick-and-mortar video game retailer reported lower revenue in the fourth quarter due to slowing spending and increased competition from e-commerce companies. .
The Grapevine, Texas-based company also said it has cut an unspecified number of jobs, along with Japan's Sony and Electronic Arts, to cut costs as economic uncertainty impacts discretionary spending. It was announced late Tuesday.
GameStop stands to lose more than $900 million in market capitalization if its pre-market losses continue.
As of Tuesday, GameStop stock has fallen nearly 12% since the beginning of the year, as the retail and e-commerce environment remains fiercely competitive for the company that was once a mainstay of U.S. malls.
The company had 4,169 stores as of February 3, and 4,413 as of January last year.
GameStop was hailed as a pioneer of Wall Street's so-called meme stocks. The company's stock price rose 100 times in a few months in 2021, largely driven by sentiment from retail buyers connected through Reddit's WallStreetBets community forum.
Russ Mold, investment director at AJ Bell, said: “Just as the meme stock boom was revived as Donald Trump's media companies enjoyed huge stock increases, the granddaddy of memes completely collapsed.'' It's a little ironic.”
Trump Media & Technology Group's stock rose more than 14% in premarket trading Wednesday, a day after its spectacular debut on the Nasdaq.
Mold added that the lack of detailed comment on the transaction and the company's decision not to hold a post-earnings conference call meant “management is hiding under a rock.”
GameStop's adjusted earnings per share, the first in four quarters, failed to cheer investors. The company's earnings were 22 cents per share on an adjusted basis in the fourth quarter ended Feb. 3, after achieving breakeven in the third quarter.
(Reporting by Jaspreet Singh and Arshiya Bajwa in Bengaluru; Editing by Maju Samuel)
