GameStop stock drops following announcement of quarterly financial loss

GameStop, the popular “meme stock” among retail investors, reported a loss of $32.3 million in its fiscal first quarter, with declining sales across hardware, software, and collectibles. This marked a significant drop from the year-ago period, where the company reported a loss of $50.5 million on higher revenue.

Analyst Adam Crisafulli of Vital Knowledge noted that while the numbers were concerning, they were in line with a preannouncement made earlier in May. Following the disappointing financial results, GameStop’s stock plummeted by 39% to $28.22, prompting the New York Stock Exchange to pause trading in the stock multiple times due to volatile trading.

The recent surge in GameStop shares can be attributed to Keith Gill, also known as “Roaring Kitty,” who resurfaced on social media after a hiatus. Gill, who owns approximately $116 million in GameStop shares, has been a key figure in driving up the stock price.

Despite the financial challenges, GameStop reported a profit of $6.7 million for the 2023 fiscal year, a significant improvement from the previous year’s loss. The company also announced plans to sell 75 million shares, which could raise around $3 billion and boost its cash holdings to $5 billion.

Wedbush Securities analysts expect GameStop to continue losing money in its core business but anticipate that its high cash balance could offset losses in the near future. With a 12-month price target of $13.50, the company’s future remains uncertain as it navigates a changing industry landscape and investor sentiment.