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GameStop Shares Plunge in Move to Issue Shares, Quarterly Sales Drop
GameStop Stock (GME) fell as much as 30% on Friday after the company filed to sell 45 million new shares of common shares and released preliminary financial results which revealed that sales fell sharply year-on-year in the most recent quarter.
The video game operator said it expects sales to be in the range of $872 million to $892 million in its fiscal first quarter, down from $1.24 billion in the same period a year ago. Wall Street expected revenue of just over $1 billion for the quarter, according to Bloomberg data.
With Friday’s drop, the stock is now below where it opened on Monday morning after the resurgence of Keith Gillaka “Roaring Kitty,” on X, formerly Twitter, over the weekend.
Gill’s defense of GameStop triggered the 2021 meme stock rally, and shares more than doubled on Tuesday morning.
“I’m not seeing anything in the pre-announcement that tells me the business is recovering,” Wedbush managing director Michael Pachter told Yahoo Finance. “But at least they will raise enough money to last another three or four years if, in fact, they continue to fail and try to find a new strategy.”
In its filing, the company noted that its shares have been subject to “extreme price fluctuations” disconnected from business fundamentals since January 2021, when the meme stock rally first took off.
GameStop added that investors who buy its shares “could lose a significant portion of their investment” if the price continues to decline.
The request to sell common shares followed a shelf of mixed titles offering presented earlier this morning, which allowed the company to issue common shares, preferred shares and other securities.
GameStop’s decision to sell shares is in line with an announcement from fellow meme stock player AMC Entertainment (AMC). On Monday, the struggling theater chain raised $250 million in “new equity capital” through the sale of 72.5 million shares, according to an SEC filing.
AMC shares have also sold off since its announcement. After rising more than 200% at its peak, AMC has now gained about 50% in the past week.
The Gamestop store in Annapolis, Maryland, on September 7, 2022. (JIM WATSON/AFP via Getty Images) (JIM WATSON via Getty Images)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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