GameStop stock looked like it was trending upwards in pre-market trading on Monday, before quickly sinking into the red once again after the market opened.
The video game retailer’s shares rose 10% Monday morning before the bell, and sank another 5% once the market opened. The stock was down 14% in afternoon trading. This extended the losses that began on Friday when Keith Gill, the investor and meme stock booster known by his social media persona “Roaring Kitty,” held his first YouTube livestream in almost three years.
Many thought the stream would give the company’s stock a major boost. But at the end of the highly anticipated stream, which was seen by more than 600,000 viewers, the video game retailer’s shares had plunged 40%. They closed out Friday down 39%, to $28.22 per share.
GameStop’s shares were already trending downward after the company reported its first-quarter earnings. The company’s net sales fell 28% to $881.8 million in the 13 weeks ended May 4, from $1.24 billion in the same period last year, the company reported before the bell on Friday. It had a net loss of 32.3 million for the quarter, narrower than its $50.5 million in losses a year ago. GameStop had projected falling sales in a regulatory filing last month.
In a separate filing Friday, the company revealed that it’s planning to sell up to 75 million additional shares of its common stock. It warned that the price of its stock “has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control,” including short squeezes. Last month, the company said it was planning a sale of 45 million additional shares of its class A common stock.
GameStop’s volatility is largely thanks to the fact that it’s a so-called meme stock, whose shares become wildly popular online and are traded feverishly by retail and individual investors, sending prices soaring regardless of the company’s actual operating results or prospects.
Prior to these disclosures, however, GameStop stock had been rallying. It skyrocketed more than 40% on Thursday afternoon after Gill scheduled the YouTube livestream to discuss his GameStop stake.
Gill, who goes by DeepF———Value on Reddit, gained national attention during the COVID-19 pandemic for his bullish analysis of GameStop on Reddit, and drove the first short squeeze of the video game retailer’s stock in early 2021. That saw its shares surge more than 1,000% in a matter of weeks.
Last month, he kicked off a renewed meme stock frenzy around GameStop stock, sending the company’s shares surging and sinking wildly over the course of several weeks. The rally, however, fell far short of its 2021 performance.
