GameStop stock sinks after sales fall, 20 million share stock offering
By James Rogers
Videogame retailer swings to quarterly profit, but sales drop more than 30%
GameStop Corp. shares took a dive Wednesday after the videogame retailer surprised investors with a quarterly profit, but sales dropped more than 30% to below analyst expectations.
The company also disclosed an "at-the-market" stock offering of up to 20 million shares, which represents 4.7% of the total shares outstanding.
The original meme stock posted late Tuesday second-quarter sales of $798 million, down 31.4% from $1.164 billion in the prior year's quarter. The average estimate of two analysts surveyed by FactSet was $896 million.
Related: Why Roaring Kitty is a GameStop 'true believer'
The stock dropped 9% in premarket trading, adding to the 3.3% selloff on Tuesday. It was headed for the third-straight quarter that it sold off the day after earnings were reported.
GameStop (GME) earned $14.8 million, or 4 cents a share, in the quarter, after a loss of $2.8 million, or 1 cent a share, in the year-ago period. On an adjusted basis, GameStop earned 1 cent a share, beating FactSet estimates for a loss of 9 cents a share, also based on projections from the two analysts.
GameStop ended the quarter with cash, cash equivalents and marketable securities of $4.204 billion, up from $1.195 billion at the end of the same period last year.
Related: GameStop is 'still a squeezable stock' and could be poised for post-earnings rally
In June, GameStop said it raised $2.14 billion in a stock sale, noting that it may use the proceeds for mergers and acquisitions. The company did not hold a conference call in conjunction with its earnings report.
GameStop shares, which were lifted by the return of influential trader Keith Gill, also known as Roaring Kitty, to social media earlier this year, are up 33.8% in 2024 through Tuesday. The S&P 500 index SPX is up 15.2% this year.
-James Rogers
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09-11-24 0615ET
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