GameStop (GME) stock took a hit on Friday, dropping around 20% mid-morning after the company unexpectedly released its fiscal first-quarter earnings report and announced another large stock offering. However, things took a turn for the worse following a lunchtime livestream hosted by the investor known as Roaring Kitty.
In the earnings report, GameStop’s net sales decreased by 28.7% year-over-year to $882 million, with a net loss per share narrowing to 11 cents from 17 cents in the previous year. The company’s decision to release the report earlier than scheduled caught Wall Street off guard, leading to a further decline in shares. Additionally, GameStop revealed plans to sell an additional 75 million shares, adding to the 45 million shares sold in May.
The volatility in GameStop’s stock has been ongoing for weeks, with investor Roaring Kitty, also known as Keith Gill, making a comeback in mid-May with a cryptic post on social media. Gill’s return to the spotlight sparked another round of meme stock mania, culminating in a livestream that drew over half a million viewers. During the livestream, Gill emphasized that he is not working with institutional backers and expressed support for GameStop CEO Ryan Cohen.
Despite the hype surrounding GameStop, the stock ended the day down 39.4%, marking its biggest one-day drop since February 2021. Market research firm Toggle AI believes that fundamental challenges remain for GameStop, citing the company’s struggle to adapt to the shift towards digital downloads in the gaming industry. The consensus analyst target price for GME stock is $7, representing a significant downside to current levels, with a consensus recommendation of Strong Sell.
As GameStop continues to navigate the volatile market, the spotlight remains on Roaring Kitty, with reports suggesting that Morgan Stanley’s investing platform E*TRADE is considering removing him from its platform. The future of GameStop stock remains uncertain, with investors closely monitoring developments in the coming days.
