Is it game over for GME’s recovery?
GameStop gives up recent gains after soft Q1 results and stock dilution.
After a week in which GameStop (GME) skyrocketed more than 300% after the social media return of the godfather of meme stocks, Roaring Kitty, things are back down to Earth.
The company has published preliminary financial results for the first quarter of 2024, which suggest a noticeable decline in sales that reflected a broader trend in the retail sector.
GME's net sales for Q1 were expected to come in between US$872 million and $892 million, well below the expected figure of US$1.045 billion, and a stark drop from the US$1.237 billion registered in Q1 2023.
This would mean the company would record a net loss of $27-37 million for that fiscal period.
To add insult to injury, the company announced that it would be potentially be selling an additional 45 million class A shares.
This would increase GME's outstanding share count by 15%, but would be an important source of capital for a company facing a challenging financial future.
What has happened with Roaring Kitty?
Roaring Kitty, the social media alter ego of investor Keith Gill, has paused his tweeting frenzy since unexpectedly returning to social media on Monday 13 May.
His last post (at the time of writing), a clip from the film E.T., depicting the departure of the titular extra-terrestrial from Earth, suggests this may be the end of his sudden social media spree.
But this has done nothing to quell the speculation amongst Reddit users (the spiritual home of meme stock investors) that Gill may have sold his X/Twitter account before his recent return.
Gill first developed a following posting videos of himself on YouTube discussing GameStop and other stocks during Covid, and the fact he has not made a return to the video platform or posted any images or videos of himself has supporters raising suspicions.
A post by known prankster @SHL0MS on X did little to fuel the flames, after the user claimed to have approached Gill with a proposal to buy his X account.
Regardless, it's hard to see how GME and other meme stocks recover their recent gains without another bullish bolt from the blue.
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