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 surge, during a YouTube livestream arranged on a laptop at the New York Stock Exchange on June 7, 2024.

Michael Nagle | Bloomberg |

GameStop Shares fell about 12% on Monday as the meme stock extended Friday's sell-off, sparked by a dismal earnings report and an uninspiring livestream from Roaring Kitty.

The video game company's shares fell to about $25 a share on Monday after falling nearly 40 percent on Friday alone. GameStop released its earnings report a few days ahead of schedule and reported that first-quarter sales fell 29 percent. 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, announcing that he had no institutional backers and the GameStop positions he shared in screenshots were his only bets. Gill also reiterated his previous investment thesis and offered little new reasoning for his large stake.

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

“We cannot see how GameStop can create value by operating new businesses, especially now that the entire senior management team has either been laid off or has decided to leave the company,” he said in a statement.

Pachter noted that GameStop's previous strategy to be like Amazon was “a miserable failure” as three former Amazon executives the company hired to implement that strategy left the company. Then, its plan to sell NFTs fell through after the company partnered with the now-defunct FTX, he added.

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

“We suppose, [Friday’s] Live stream from influencer Keith Gill (Roaring Kitty) will keep the shares high long enough for the company to [at-the-market share offering]but since we do not have a clear strategy, we suspect that the share price will start to decline again and approach our new price target,” said Pachter.

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