GameStop’s stock price plunges about 20% after meme stock surge
GameStop’s stock price plunges about 20% after meme stock surge
The video game retailer’s GME stock dropped back to Earth after the company announced plans to sell new shares and lowered its sales forecasts.
BY Chris Morris
Roaring Kitty‘s meme stock revival may have come to an end. Shares of GameStop, after surging for the past week following the breaking-of-silence by investor Keith Gill, fell back to Earth Friday, losing close to 20% of their value.
Shares are now trading below where they stood when Gill resurfaced after a three-year absence.
The drop came after GameStop announced plans Friday to sell an additional 45 million shares on the open market. In a separate statement, the company said it now expects first-quarter sales to range between $872 million to $892 million, considerably lower than the $1.24 billion it made in the same quarter last year and below analyst estimates of $1 billion.
It was the end of a volatile week for the company that set new bars for volatility three years ago. But GameStop is in a different place today than it was then, continuing to lose market share to digital sales and failing to come up with any sort of viable plan to improve its fortunes. The video game sector as a whole has lost steam since the start of the pandemic and aside from the release of Grand Theft Auto VI in the fall of 2025, there are no near-term catalysts in sight.
GameStop now expects to lose between $27 million and $37 million in the first quarter. That would be better than the $50.5 million it lost in the same period a year ago, but the company has been cutting staff and closing locations, so losses were expected to be less severe.
Analysts said the issuance of new shares made sense, given the surge in the stock price, as it was an opportunity to raise the company’s cash reserves while sales continue to fall. However, they remain pessimistic about its long-term future.
“We do not believe GameStop can ‘save its way to prosperity’, and expect the mix of software sales to continue to shift to digital and away from physical,” said Michael Pachter of Wedbush in a note to investors. “While there will likely be a new Nintendo console next year and an overall lift in software sales from GTA VI, we think GameStop will see continuing sales declines next year as well. Ultimately, the company must deploy its cash productively or continue to hope that it can issue more shares at elevated levels to forestall the inevitable.”
Pachter, earlier this year, predicted GameStop could be gone in less than five years.
The surge in GameStop shares came after Gill resurfaced online, posting an image of a man sitting forward in his chair, a meme that gamers often use when things get serious. That rallied the faithful, who drove up shares by as much as 179% from the close on May 10.
Gill has continued to be active with meme posts on X/Twitter.
Since the earnings preannouncement by GameStop and the company’s decision to sell additional shares this morning, he has posted 17 additional memes, indicating he plans to continue throwing his support behind the company.
Despite the meme optimism, Gill has not posted on his Reddit account, which once tracked his GameStop holdings and gains/losses with the stock, at any time during this surge.
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