December 27, 2024

Omar Marks | Light Rocket | Getty Images

game station Shares plunged more than 20% in premarket Friday after the video game retailer said it planned to sell securities and reported preliminary results showing a drop in first-quarter sales.

The company said it now expects net sales to be between $872 million and $892 million, down from $1.237 billion in the same period last year. Two analysts polled by FactSet expected first-quarter revenue of about $1 billion.

Net loss is expected to be between $27 million and $37 million, compared with a net loss of $50.5 million in the previous fiscal quarter. The brick-and-mortar video game company has been battling stiff competition from e-commerce rivals. In late March, GameStop announced an unknown number of layoffs to reduce costs.

GameStop said in a separate filing that it would sell up to 45 million shares of its common stock in a market offering.

The securities offering comes earlier this week as GameStop shares surged amid a brief resurgence in meme stock trading. GameStop hit a high of $64.83 per share on Tuesday, up more than 200% from Friday’s close.

Stock chart iconStock chart icon

Hide content

game station

The rally appears to have been driven in part by posts on X by the long-dormant account Roaring Kitty, aka Keith Gill, one of the key figures in the 2021 meme stock craze .

That move appeared to fade later in the week, with the stock falling sharply on Wednesday and Thursday. The stock closed at just $27.67 on Thursday, down more than 50% from this week’s high. Net inflows from retail traders were much smaller this time than during the trading frenzy three years ago.

Michael Pachter, a Wedbush analyst who covers GameStop, said GameStop cannot be profitable.

“They made $6 million last year and burned through cash,” Pachter said. “We expect them to lose $100 million a year going forward. It’s a race to see if they can close stores fast enough to limit losses, but they have no plan to show they can grow revenue or profits and their core business is in decline .

Pachter rates GameStop an underperform and has a price target of $5.60.

—CNBC’s Jesse Pound contributed reporting.

About The Author

Leave a Reply

Your email address will not be published. Required fields are marked *