GameStop (NYSE:GME) stock dropped by as much as 17% in early trading on Friday following the video game retailer’s disappointing quarterly results announcement and news of a stock sale. This occurred just hours before a highly anticipated livestream from “Roaring Kitty,” an alias associated with bullish retail investor Keith Gill.
GameStop reported an adjusted loss of $0.12 per share for the first quarter, missing analyst estimates of a $0.09 loss. Net sales also fell short, dropping by 29% to $882 million, compared to analyst expectations of $995.5 million. These quarterly results were expected to be released later this month.
In addition to the earnings miss, GameStop filed to sell up to 75 million additional shares. Last month, the company sold 45 million shares, generating approximately $930 million in proceeds.
The announcements coincided with a surge in GameStop’s stock price the day before, following news of “Roaring Kitty’s” scheduled YouTube livestream. This would be Gill’s first live appearance on the channel since his bullish videos and posts helped drive the meme stock rally in 2021.
After the market closed on Thursday, “DeepF***ingValue,” a Reddit user handle associated with Gill, shared a screenshot purportedly showing the user’s portfolio reaching $586 million, including GameStop stock holdings and unexercised options positions.
Earlier in the week, the same user disclosed a $175 million bet on GameStop, which led to a surge in the stock price. However, Gill’s return to social media has sparked calls for an investigation into his activities.
Massachusetts’ top securities regulator confirmed to Reuters that they have initiated a probe into “Roaring Kitty’s” GameStop trades. Additionally, the Wall Street Journal reported that executives at Morgan Stanley’s (MS) E-Trade platform were considering closing an account linked to the screenshot posted by Gill, causing GameStop shares to decline by approximately 5%.
GameStop experienced a 180% rally over two days in mid-May after “Roaring Kitty” resurfaced on X (formerly Twitter). However, analysts caution that the current meme stock activity lacks the retail investor enthusiasm seen three years ago.
Featured Image: Megapixl
