(Reuters) – Shares of GameStop, a widely watched meme stock, tumbled 10% in premarket trading on Wednesday after the video game retailer reported a bigger drop in quarterly revenue, questioning its ability to revitalize its business.
The company, which is feverishly tracked by retail investors following a meme stock frenzy in early 2021 that sent its shares to dizzying levels, has been trying to restructure itself by operating a smaller network of stores and focusing on selling more value-added items to boost sales and profitability.
The 31% slide in GameStop’s revenue in the most recent quarter overshadowed a swing to net profit. It also announced a plan to sell up to 20 million shares to fund acquisitions.
GameStop has raised a little over $3 billion through share sales in May and June, taking advantage of wild swings in its stock following bullish bets by Keith Gill, also known as “Roaring Kitty”, who has been a key figure in the so-called “Reddit rally.”
The stock more than doubled over a few days in May after Gill returned from a three-year hiatus and then crashed 40% in June after Gill’s livestream failed to drum up investor interest.
Still, the stock is up about 34% this year through Tuesday. It was trading at $21.14 in premarket trading on Wednesday.
GameStop’s stock reached an intra-day peak of nearly $121 in January 2021 from about $10 a few days earlier, in a roller-coaster ride for investors before crashing nearly 90% in the following month.
(Reporting by Yuvraj Malik in Bengaluru; Editing by Anil D’Silva)
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