GME Stock Alert: GameStop Reports Sales Decline Due to Weaker Customer Traffic

GameStop (NYSE:GME) unexpectedly released first-quarter results and the news was not good. GME shares lost 19% in premarket trading.

The video game chain, which has become a meme stock thanks to Roaring Kitty, saw a decline in sales and customer traffic. The company lost $32.3 million, 11 cents per share, on revenue of $882 million. A year ago, GameStop lost $50.5 million, 17 cents per share, on revenue of $1.24 million.

The results were expected for June 17, but were brought forward due to stock volatility.

In addition to reporting negative results, GameStop announced it would sell an additional $30 million worth of shares. This is in addition to the 45 million shares it offered in May to raise $900 million.

Match result?

After a 46% surge on June 6, shares plunged overnight, dropping the market cap below $14 billion. When I started writing, shares were selling for about $39 apiece, but fell quickly.

The gains came as Roaring Kitty himself, whose name is Keith Gill, scheduled a livestream on YouTube for 12:00 p.m. Eastern Time to boost the stock. About 10,000 people had already planned to attend.

Gill hosted similar shows in August 2020, promoting GameStop.

Gill said last Sunday that he has 120,000 call options on GameStop that can be exercised at $20 each, meaning he will still be in the money when trading begins. Exercising his options would increase Gill’s stake in the company to 17 million shares.

GameStop cannot attribute its results to a weak economy. Nonfarm payrolls in the US were 272,000 in May, significantly higher than expected.

At the 2021 Meme Stock Rally Tough (NASDAQ:CHWY) co-founder Ryan Cohen acquired a huge stake and eventually became CEO. Analysts can now speculate on Gill’s fate in the latest build-up.

GME shares: What’s next?

It seems GameStop is desperate to end the game before it goes much further. One trader called the announcement a “checkmate.” Gill needs $240 million in cash to exercise his options, which could lead to forced liquidations in GameStop and other stocks.

Still, doesn’t it entertain you?

At the time of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com policies. Publishing guidelines.