GameStop (GME) stock was down around 20% mid-morning Friday after the video-game retailer unexpectedly released its fiscal first-quarter earnings report and announced another large stock offering. However, shares fell even further following a lunchtime livestream hosted by the investor known as Roaring Kitty.
Starting with the earnings report. In the 13 weeks ended May 4, GameStop's net sales decreased 28.7% year-over-year to $882 million and its net loss per share narrowed to 11 cents from 17 cents in the year-ago period.
The company wasn't scheduled on the earnings calendar until next week, so this morning's news caught Wall Street off guard. This, alongside a regulatory filing that reveals GameStop plans to sell an additional 75 million shares, adding to the 45 million shares it sold in May, sent the shares lower. However, the volatility in GME got started weeks ago.
Specifically, Keith Gill, also known as "Roaring Kitty" on social media, who sparked a massive short squeeze in GameStop stock back in 2021, returned to the spotlight with a cryptic post on X in mid-May, igniting another round of meme stock mania.
While Gill has only posted memes and short video clips to his X account since returning, earlier this week he announced his first livestream in nearly four years.
The livestream kicked off this afternoon. During the event, which drew more than half a million viewers, the investor said he is not working with any institutional backers and reiterated his support for GameStop CEO Ryan Cohen. Gill also told those watching that none of what he says should be considered advice and that they need to make their own investment decisions.
GameStop, which was halted several times in intraday trading, eventually ended Friday down 39.4%. This was its biggest one-day drop since February 2021, according to Dow Jones Market Data.
Gill could remain in the spotlight in another way, too, as The Wall Street Journal on Monday reported that Morgan Stanley's investing platform E*TRADE is considering removing him from its platform.
Is GameStop stock a buy, sell or hold?
Market research firm Toggle AI thinks fundamental challenges remain at GameStop.
"The video-game retailer took advantage of a trading frenzy [in May], selling 45 million shares and raising approximately $933 million," Toggle AI president Guiseppe Sette said in a statement. "Despite this financial maneuver, GameStop's core business remains challenged. With gamers increasingly opting for digital downloads over physical stores, the company has struggled. Recent operational updates revealed net sales falling short of estimates as the company focuses on cost-cutting measures."
Meanwhile, according to S&P Global Market Intelligence, the consensus analyst target price for GME stock is $7, representing implied downside of nearly 75% to current levels. Meanwhile, the consensus recommendation is a Strong Sell.
