Yahoo Finance GameStop stock tanks on move to issue shares, quarterly sales decline
GameStop stock (GME) sank as much as 30% on Friday after the company filed to sell 45 million new shares of common stock and released preliminary financial results that revealed sales fell sharply from the year prior in its most recent quarter.
The video game operator said it expects sales to be in the range of $872 million-$892 million in its fiscal first quarter, down from $1.24 billion in the same period a year prior. Wall Street had expected revenue of just over $1 billion for the quarter, according to data from Bloomberg.
With Friday's decline, the stock is now below where it opened Monday morning after the reemergence of Keith Gill, also known as "Roaring Kitty," on X, formerly Twitter, over the weekend.
Gill's bull case for GameStop ignited the meme stock rally back in 2021, and the stock more than doubled by Tuesday morning.
"I'm not seeing anything in the preannouncement that tells me that the business is turning around," Wedbush managing director Michael Pachter told Yahoo Finance. "But at least they'll raise enough cash to last them another three or four years if they, in fact, continue to fail and try to find a new strategy."
In its filing, the company noted its stock has been subject to "extreme price fluctuations" disconnected from the business's fundamentals since January 2021, when the meme stock rally first took off.
GameStop added that investors buying its stock "may lose a significant portion of their investments" should the price continue to fall.
The filing to sell common stock followed a mixed securities shelf offering filed earlier this morning, which allowed the company to issue common stock, preferred stock, and other securities.
GameStop's move to sell stock falls in line with an announcement from fellow meme stock play AMC Entertainment (AMC). On Monday, the struggling theater chain raised $250 million of "new equity capital" through the sale of 72.5 million shares, per an SEC filing.
Shares in AMC 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.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for in-depth analysis of the latest stock market news and events moving stock prices.
Read the latest financial and business news from Yahoo Finance
