GameStop (GME) shares tumbled by up to 23% on Friday following the video game retailer’s release of quarterly results that fell short of analyst predictions. The company also revealed plans for a stock sale just hours before a highly anticipated livestream by “Roaring Kitty,” the online alias previously used by bullish retail investor Keith Gill.
For the first quarter, GameStop reported an adjusted loss of $0.12 per share, which was worse than the expected $0.09 loss. Net sales decreased by 29% to $882 million, falling short of the analyst forecast of $995.5 million. Wall Street had been expecting the quarterly results later in the month.
In addition to the earnings report, GameStop announced it would sell up to 75 million additional shares. This follows last month’s sale of 45 million shares, which generated approximately $930 million in proceeds.
The news came after the stock had surged by 47% in the previous session, driven by the anticipation of a YouTube livestream by “Roaring Kitty,” set for noon ET on Friday. This would be Keith Gill’s first live appearance on the channel since his bullish videos and posts helped fuel the meme stock rally of 2021.
After the market closed on Thursday, “DeepF***ingValue,” another alias associated with Gill on Reddit, shared a screenshot showing the user’s portfolio ballooning to $586 million, which included GameStop stock and unexercised options positions.
Earlier in the week, the same user disclosed a $175 million investment in GameStop, leading to another surge in the stock.
Over the past month, GameStop shares have experienced significant volatility with Gill’s reappearance on social media, sparking calls for an investigation into his actions.
“The fact that this individual bought short-dated call options on GameStop and then tweeted for the first time in forever, knowing that the Reddit WallStreetBets community would push the stock price up, is suspicious,” Anthony Chukumba, Managing Director at Loop Capital Markets, told Yahoo Finance on Thursday.
Earlier this week, Massachusetts’ top securities regulator confirmed to Reuters that they have initiated an investigation into “Roaring Kitty’s” GameStop transactions.
Late on Monday, following Gill’s weekend reemergence, the Wall Street Journal reported that Morgan Stanley’s (MS) E-Trade platform was considering closing an account linked to the screenshot. GameStop shares dropped about 5% the following day.
In mid-May, GameStop shares surged by 180% over two days after “Roaring Kitty” posted on X (formerly Twitter) for the first time since 2021.
Last month’s rally was brief, and analysts have cautioned that the current meme stock activity is nowhere near the level of retail investor enthusiasm seen three years ago.
