GameStop stock tanks on move to issue shares, quarterly sales decline

05/17/2024 19:40

GameStop shares tanked on Friday morning after the company filed to sell stock and pre-announced sales for the first quarter that came in below Wall Street's estimates.

GameStop (GME) stock sank more than 17% in pre-market trading as the company filed to issue shares and released preliminary financial results that revealed sales fell from the year prior.

The video game operator said it expects sales to be in a range of $872 million to $892 million, down from $1.24 billion in the same period a year prior. Wall Street had expected revenue of just over $1 billion for the quarter, according to data from Bloomberg.

On Friday, the company also filed a mixed securities shelf offering, which allows the company to issue stock. The company filed to issue up to 45 million shares.

The release capped off a wild week of trading in shares of GameStop. The stock rallied more than 200% headed in the first two days of trading this week after the reemergence of Keith Gill on X, also known as "Roaring Kitty," whose bull case for GameStop ignited the meme stock rally back in 2021.

But shares have slumped in the days since. The stock was set to open trading up just more than 20% from last Friday's close, before the meme stock craze was reignited.

In its filing, the company noted its stock has been subject to "extreme price fluctuations" disconnected from the businesses' fundamentals since January 2021, when the meme stock rally first took off. GameStop added investors buying its stock "may lose a significant portion of their investments" should the price continue to fall.

The Gamestop store in Annapolis, Maryland, on September 7, 2022. - GameStop shares moved lower Wednesday ahead of the video game retailer's second quarter earnings after the closing bell. (Photo by Jim WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images) — The Gamestop store in Annapolis, Maryland, on September 7, 2022. - (Photo by Jim WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images) (JIM WATSON via Getty Images)

GameStop's moves to sell stock falls in line with a move from fellow meme stock play AMC Entertainment (AMC). On Monday, The struggling theater chain raised $250 million of "new equity capital" through the sale of 72.5 million shares on Monday, per an SEC filing.

Shares in AMC have also sold off since its announcement. After rising more than 200% at its peak, AMC has now gained about 50% in the past week.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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