GameStop shares took a hit on Monday, dropping about 12% following a significant decline of nearly 40% on Friday. This downward spiral was triggered by a disappointing earnings report and an unimpressive livestream from Keith Gill, a prominent figure in the Reddit community who played a key role in GameStop’s previous rally.
In the unexpected earnings report released ahead of schedule, GameStop revealed a 29% decrease in sales for the first quarter. Additionally, the company announced plans to sell an additional 75 million shares, further contributing to investor concerns.
Keith Gill, also known as Roaring Kitty, hosted a livestream on Friday where he clarified that he did not have any institutional support and that his GameStop positions were based solely on his own analysis. Despite reiterating his investment thesis, Gill failed to provide any new compelling reasons for his significant investment in the company.
GameStop analyst Michael Pachter from Wedbush expressed skepticism regarding the company’s ability to make a substantial recovery, citing a series of unsuccessful strategies. He criticized GameStop’s previous attempts to emulate Amazon, which resulted in the departure of key executives hired to execute the strategy. Additionally, GameStop’s venture into selling NFTs through a partnership with FTX ultimately failed.
Pachter cast doubt on the sustainability of the recent boost in GameStop’s stock price driven by Keith Gill’s livestream, suggesting that it may be short-lived. He anticipates that once the company completes its share offering, the stock price could resume its decline, approaching the analyst’s revised price target.
In light of these developments, investors are closely monitoring GameStop’s next steps and its ability to implement a successful turnaround strategy. The future trajectory of the company remains uncertain, with challenges ahead as it navigates through a turbulent period in the stock market.