GameStop reports lower first-quarter revenues and files to sell more stock, which causes its shares to plunge 20%

GameStop’s stock fell 25% on Friday following the retailer of video games’ announcement that it intends to sell more shares and the release of preliminary financial data that indicated a decline in first-quarter revenues.

The video game store said in a recent regulatory filing that it will conduct an at-the-market sale of up to 45 million class A common shares. The transaction follows a short resurgence of the meme stock trade earlier this week, during which GameStop shares soared.

In the meanwhile, GameStop stated in a different statement that it now projects net first-quarter sales in the $872 million to $892 million range, down from around $1.24 billion in the same quarter of the previous year. According to two FactSet analysts surveyed, they anticipated sales in the first quarter of about $1 billion.

GameStop is predicted to have lost between $27 and $37 million in the first quarter of this year, which is less than the $50.5 million it lost during the same period last year. The e-commerce competitors have been posing a challenge to the physical business. GameStop revealed a handful of job losses in late March, but they were not disclosed.

Posts on X from the long-dormant account of «Roaring Kitty,» also known as Keith Gill, one of the major players in the 2021 meme stock hysteria, seem to have contributed to this week’s GameStop rise. GameStop increased by more than 200% from its May 10 closing price to a high of $64.83 per share on Tuesday.