GameStop shares slide 12% following Friday’s 40% sell-off

GameStop shares slide 12% following Friday’s 40% sell-off

Keith Gill, a Reddit user credited with inspiring GameStop’s rally, during a YouTube livestream arranged on a laptop at the New York Stock Exchange on June 7, 2024.

Michael Nagle | Bloomberg | Getty Images

GameStop Shares fell about 12% on Monday as the meme stock extended Friday’s selloff sparked by a dismal earnings report and an uninspiring Roaring Kitty livestream.

The video game company’s stock fell to about $25 apiece on Monday after falling nearly 40% on Friday alone. GameStop released its earnings report a few days ahead of schedule and reported a 29% decline in first-quarter sales. GameStop also announced it would sell an additional 75 million shares.

Meanwhile, meme stock champion Keith Gill hosted his first livestream in several years on Friday. He revealed that he had no institutional backers and the GameStop positions he shared in screenshots were his only bets. Gill also reiterated his earlier investment thesis and offered little new reason for his large stake.

Michael Pachter, GameStop analyst at Wedbush, said he remains skeptical that the company can lead a meaningful turnaround after several recent failed strategies.

“We fail to see how GameStop creates value by creating new stores, especially now that all of its senior management have either resigned or decided to leave,” he said in a note.

Pachter noted that GameStop’s previous strategy of being like Amazon was “a dismal failure,” with three former Amazon executives the company hired to pursue that strategy leaving the company. Then its plan to sell NFTs fell through after it partnered with the now-defunct FTX, he added.

The analyst believes the boost GameStop received from Gill could be short-lived.

“We suspect so [Friday’s] Influencer Keith Gill’s (Roaring Kitty) live stream will keep stocks high long enough for the company to complete its promotion [at-the-market share offering]“But without a clear strategy, we assume that the share price will fall again and approach our new price target,” said Pachter.

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2024-06-10 19:50:56