Unlock Editor’s Digest for free
Roula Khalaf, FT Editor, picks her favorite stories in this weekly newsletter.
Shares of GameStop fell more than a tenth in pre-market trading on Friday after the gaming retailer announced quarterly earnings and moved to capitalize on its new meme stock fame to tout sell up to 75 million new shares.
The struggling group, which has not reported an annual operating profit since 2019, has seen its shares soar more than 150% since the mid-May apparent comeback of Keith Gill, who follow Roaring Kitty on various social media platforms and who became famous in 2021 for his belief in the company during the meme stock craze.
On Friday GameStop reported first-quarter revenue down 29% year-over-year, but net loss narrowed to $32.3 million from $50.5 million a year ago. Investment returns have helped offset losses from challenging retail operations in recent quarters.
Both numbers were in the middle of the range the company reported when it released preliminary results alongside its May announcement of a separate capital raise.
Friday’s statement provided no management commentary on its underlying business performance. The company was scheduled to release the figures next week.
GameStop shares jumped 47% on Thursday after Roaring Kitty’s YouTube channel warned followers of a livestream event at midday Friday, US east coast time. So far Gill has not explained his return after a three-year hiatus. Last weekend he posted a screenshot about his apparent stake in the company.
An updated screenshot posted to Gill’s Reddit account late Thursday showed $557 million worth of stock and options holdings.
Last month, GameStop sold 45 million new shares, earned 933 million USD, after Gill’s initial gains sent shares surging. It reported cash of $999 million in the first quarter before the new fund. It has minimal debt.
If it sold the new shares at Thursday’s closing price of $46.66, giving the company a market capitalization of $14.3 billion, it would raise $3.5 billion.
Average trading volume in GameStop has increased sevenfold since Roaring Kitty’s return compared to this year’s level before then. They focused on days when Gill’s social media accounts posted something new.
Some industry watchers have warned that retail interest in the stock appears to be waning. According to data from VandaTrack, retail stock purchases worth about $18 million were made on Monday, followed by $3.1 million on Tuesday.
“We estimate that retail traders make up about 11% of the total [GameStop] revenue Monday through Tuesday,” Vanda said in a note on Wednesday.
