GameStop announces decline in quarterly sales, plans share sale ahead of livestream by meme stock influencer.

GameStop surprised investors on Friday by revealing a decline in quarterly sales and announcing its intention to sell up to 75 million shares, just ahead of a highly anticipated livestream by meme stock influencer Keith Gill.

The struggling video game retailer’s shares plummeted 20% to $36 before the opening bell, making it the most-traded stock across U.S. exchanges, with over 40 million shares changing hands by 8:53 am ET.

Gill, popularly known as “Roaring Kitty” among traders, hinted at a livestream scheduled for 12 pm ET on YouTube, which had driven GameStop shares up by over 47% in the previous session. However, the stock experienced a downturn after the company’s announcement of plans to raise more than $3 billion through a share sale.

The first-quarter results indicated a decline in net sales compared to the previous year, reflecting GameStop’s ongoing struggle against the growing preference for e-commerce platforms among customers for purchasing video games and collectibles.

Thomas Hayes, chairman at Great Hill Capital LLC in New York, commented, “Every time Roaring Kitty pumps up the stock, they get a spike that they can use to raise more equity and dilute shareholders. So this is an AMC part two – a secularly declining business with sporadic retail interest from time to time.”

GameStop did not provide immediate details on its results, which were released four days ahead of schedule without explanation.

Just a month ago, GameStop capitalized on the revival of meme-stock rally by selling 45 million shares, generating over $900 million in revenue.

In 2021, Gill’s advocacy for GameStop drove its shares to soar by as much as 1,600% before experiencing a significant drop. Despite his polarizing influence, Gill garnered a devoted following among some investors.

His recent resurgence on social media platforms led to a surge in GameStop shares in recent weeks, rising nearly 150% since May 13 when an account linked to Gill began posting bullish memes about the company.

However, other meme stocks, including AMC Entertainment and Koss, witnessed declines on Friday after experiencing double-digit gains in the prior session.

Analysts noted that while the 2021 GameStop rally was fueled by a collective effort from retail investors targeting hedge funds, the current market fervor appears to lack the same intensity.