GameStop shares took a nosedive on Friday as the struggling video game retailer announced plans for a new share sale, despite efforts by the infamous “meme stock” trader Roaring Kitty to rally support for the stock.
The stock closed almost 40 percent lower, erasing some of the gains made since Roaring Kitty, also known as Keith Gill, re-entered the scene in mid-May. In a YouTube livestream, Gill expressed his support for GameStop’s chief executive Ryan Cohen, emphasizing his belief in Cohen’s ability to turn the company around.
GameStop has been leveraging its popularity among retail traders to improve its financial standing through multiple stock sales. The company revealed plans to sell an additional 75 million shares, alongside the early release of its first-quarter financial results, which showed a decrease in sales but a reduction in net losses.
Despite the decline in GameStop’s core business of selling game consoles and software, gains from investments have helped offset losses from its retail operations. Last month, the company raised $933 million through a stock sale, and with the potential sale of the new shares, it could raise an additional $2.1 billion.
Screenshots of Gill’s investment in GameStop stock and call options worth $557 million sparked speculation about third-party funding, which Gill denied during the livestream. Despite the stock’s drop on Friday, it is still up 60 percent since Gill’s return in May.
As the livestream ended with the stock hitting a new low, Gill, sporting white sunglasses and bandages, joked about his mental state. The unpredictable nature of GameStop’s stock and the ongoing saga with Roaring Kitty continue to captivate investors and traders alike.