Video game store turned meme stock GameStop has filed to sell up to 45 million of its GME shares. This move will see the total number of shares increase by as much as 15%.
This comes the same day that GameStop filed its preliminary Q1 results which revealed that net sales have decreased 30% compared to last year. That said, the company’s net loss is expected to be up to $23.5 million less than last year, although this could still leave GameStop with a net loss of up to $37 million.
If GameStop is able to sell 45 million shares at the current market price of $227, the company could bring in up to $990 million—although shifting such a high volume of shares is likely to move the price of the stock. Pre-market trading saw shares drop by as much as 20% overnight. And things didn’t improve after the opening bell.
At the time of writing, GME is trading for about $21 and stretching the losses to 24% compared to Thursday’s closing price.
The company acknowledged recent price fluctuations, but stopped short of name-dropping Roaring Kitty, the r/WallStreetBets Reddit community, or its status as a “meme stock.”
"Our common stock has experienced extreme volatility in price and trading volume.” GameStop said in the prospectus supplement. “We did not experience any material changes in our financial condition or results of operations that would explain such price volatility or trading volume.”
GameStop has become somewhat of a cult meme stock after the 2021 short squeeze which saw the stock reach its all time high of $81. Meme influencer Roaring Kitty played a central role in this saga which was later turned into a documentary and feature film. Earlier this week, Roaring Kitty appeared to return to Twitter after three years of silence which has seen more volatility for the stock—prompting exchanges to halt trading at least six times.
The prospectus listed a number of factors which have influenced the price of GME, as a nod to its past this list includes “short squeezes,” as well as “message boards and social and other media.”
Several firms opened short positions against GameStop in the run up to the 2021 short squeeze. That included Melvin Capital, which lost nearly $3 billion after it was forced to close its positions.
GameStop highlights short sellers are continuing to trade its stock which it says puts “pressure on the supply and demand for our common stock, further influencing volatility in its market price.”
Edited by Stacy Elliott.