GameStop Shares See Dip After Previous Slump
Shares of GameStop have dropped slightly in premarket U.S. trading on Tuesday, continuing a trend from the previous day. This drop follows a 12.1% slump on Monday after the company's CEO, Ryan Cohen, made some significant announcements.
Key Announcements from CEO Ryan Cohen
Ryan Cohen informed investors that GameStop would be reducing its number of stores to try and boost profits. However, he did not explain what the company plans to do with almost $4 billion in cash it gathered from share sales in May and June. Cohen only mentioned that having a stronger balance sheet was an "advantage."
Decline in Sales
GameStop has noticed a decline in sales as more gamers are purchasing their games online rather than from new or used videogame discs typically sold by the retailer. In a first-quarter earnings release, net sales dropped to $881.8 million, down from $1.24 billion the previous year.
Fundraising and Meme Stock Influence
Despite the drop in sales, GameStop raised $933 million from a stock sale after a spike in share price last month. Additionally, the company secured another $2.14 billion in June. These spikes in stock price were influenced by Keith Gill, known online as "Roaring Kitty," who sparked interest in meme stocks back in 2021 and made a big bet on the company again in May.
The Current Stock Situation
As of now, the shares are trading significantly below the highs they reached after Gill's return and have lost over 70% of their value since their peak in 2021.
By understanding the shifts and changes at GameStop, housewives and other readers can get a clearer picture of why this well-known company is facing challenges and what it means for their investments.
