On Tuesday, GameStop revealed a mixed second-quarter earnings report and filed a 20 million offering, leading its stock to decline after hours.
The video game retailer’s stock closed the session by plunging -3.30% to $23.45 apiece and dropped -10.41% to $21.01 per stock in the extended trading.
Meanwhile, its earnings per share rose by $0.04, higher than the experts’ -$0.09 consensus and a -$0.12 from previous data.
However, the firm’s revenue dropped by $798.00 million, lower than the analysts’ $895.67 million forecast and $881.80 million last quarter.
According to reports, the firm, a focal point of the meme stock trading craze, faces challenges. Its main business of selling new and used video game discs is plummeting due to the growing trend of digital downloads, game streaming, and online shopping.
Furthermore, GameStop disclosed a net income of $14.80 million, compared to a loss of $2.80 million in the same period last year. This improvement was aided by a -16.00% reduction in sales and administrative expenses during the quarter.
The solid bottom line was primarily due to cost cuts, which helped counterbalance a -31.00% decline in Q2 revenue compared to the previous year.
Selling, general, and administrative expenses also dropped to $270.80 million in the recent quarter from $322.50 million in the same quarter last year.
Roaring Kitty’s Resurgence Signals Volatility for GameStop
Reports noted that GameStop was highly volatile in 2024 after Keith Gill, known as Roaring Kitty, returned to X with a cryptic meme.
Furthermore, sources noted that Gill’s resurgence was widely considered bullish for the videogame-retailer firm.
Meanwhile, the 2021 frenzy surrounding the video retailer firm and other meme stocks was fueled by investors on Reddit’s WallStreetBets forum. Roaring Kitty has sparked much of the momentum.
Analysts stated on Friday that the rapid expansion of streaming services is significantly challenging GameStop’s planned return to growth. They also noted that the company lacks a clear strategy for entering new growth-potential categories.
