David Randall and Shruti Shankar
(Reuters) – GameStop reported lower quarterly sales and said it would sell 75 million shares, a surprise move on Friday ahead of a highly anticipated livestream by meme stock influencer Keith Gill.
Shares of the struggling video game retailer, which was expected to report results on June 11, fell nearly 10% in early trading.
Gill, the online shareholder influencer known as “Roaring Kitty” and a key figure in GameStop (NYSE:) stock’s stunning run in 2021, posted on YouTube saying he would be hosting a livestream at 12:00 pm ET.
This sent GameStop shares up more than 47% in the previous session. But they fell after the company on Friday announced plans to raise more than $3 billion through a stock sale.
The company’s net sales fell in the first quarter as it grapples with customers turning to e-commerce firms to buy video games and collectibles.
“No matter how much noise someone makes on any platform, at some stage the company will have to generate earnings and especially cash flow to support that valuation,” said Russ Mold, investment director at AJ Bell.
“The question everyone should ask is: Has anything fundamental changed in the company’s competitive position in the last month?”
In 2021, Gill’s support for GameStop helped its shares rise as much as 1,600% before falling back. It has gained a cult following among some investors and fame among others.
Its apparent comeback has sent GameStop shares soaring in recent weeks. They’ve risen nearly 150% since May 13, when an X account linked to Gill began posting a series of memes that some investors saw as a sign of his optimism about the company.
GameStop shares rose 21% on June 3 after Gill’s Reddit account posted a screenshot showing a $116 million bet on the stock. The announcement, the first in three years, showed a position of 120,000 GameStop call options dated June 21 with a strike price of $20, which was worth $65.7 million at last Friday’s close.
Shares of other companies linked to the meme phenomenon also fell on Friday, with shares of AMC Entertainment (NYSE:) and headphone maker Koss falling more than 10% after posting double-digit gains in the previous session.
NOT LIKE 2021
While the 2021 rally was fueled in part by retail investors rallying to punish hedge funds that had taken bearish positions in GameStop and other companies, some analysts say the same degree of fervor appears to be missing this time.
“Despite Keith Gill’s resumption of speech over the weekend and subsequent surge in GME prices, retail traders don’t appear to be sticking around for too long,” Vanda (NASDAQ:) Track analysts wrote in a note earlier this week.
At the same time, Wand said, “High-frequency institutional traders are leading the retail trading effort, and performance data shows that this is not really turning into a widespread bullish phenomenon for the meme stock cohort.”
According to the analytics company Ortex, the share of short shares in the free float amounted to 19.87%.
Broader market conditions do not reflect the same speculative energy seen in 2021, said Jason Draho, head of Americas asset allocation at UBS Global Wealth Management.
The IPO market remains dormant and M&A activity is moderate, he said. “Meme stock activity is nowhere near what it was in 2021, although we are seeing sharp one-day moves.”