Source: Glonui.
Is speculating on Gamestop the same as buying lottery tickets?
Recently, the reappearance of internet celebrity and GameStop influencer 'Roaring Little Cat' has reignited people's interest in GameStop. However, surprising Q1 results and the announcement of a stock sales plan on Friday caused the stock price to continue to fall and hit multiple circuit breakers.
At the close of the U.S. stock market on Friday, GameStop fell 39.38%, to $28.22 per share, the biggest drop in three years, and the company's stock continued to fall nearly 4% after the market closed.
A plan to sell a large amount of stock after underperforming.
At noon local time on Friday, GameStop influencer and 'little guy leader' Keith Gill, known by the online nickname 'Roaring Little Cat' on Twitter and YouTube under Google's umbrella, began a live YouTube video broadcast.
Within 5 minutes of the start of the livestream, over 600,000 viewers were watching live.
The entire background image of the livestream was the GameStop stock real-time trading chart, and due to multiple drops and circuit breakers, Gil repeatedly asked the audience 'is my computer frozen?'
In fact, the surprising release of Q1 results and announcement of a stock sales plan by GameStop on Friday was due to the reappearance of internet celebrity and GameStop influencer 'Roaring Little Cat', which reignited interest in the stock - the video game retailer had earlier planned to announce its quarterly results on Tuesday.
The company reported Q1 revenue of $882 million, lower than the $1.237 billion in the same period last year and lower than the estimated $995.5 million. While its losses narrowed, sales fell more than 29%, consistent with preliminary data announced last month.
The company also announced plans to sell 75 million shares of stock in a so-called 'market value' offering that could raise $2.5 billion. Last month, the company announced a sale of 45 million shares of stock, raising $933.4 million.
Affected by the stock sales plan, the GameStop stock price fell sharply, dropping nearly 40% when Gil's livestream ended. Due to the high market volatility, the stock was halted 16 times during trading.
Buying GameStop stock is like buying a lottery ticket?
Over the past month, as Keith Gill has reappeared on social media, GameStop's stock price has experienced roller coaster-like fluctuations. In mid-May, after 'Roaring Little Cat' posted on Twitter for the first time this year, GameStop's stock price rose 180% in just two days.
In the livestream, he mentioned that GameStop is the only position in his investment portfolio, 'my aggressive investment style is probably not suitable for netizens.' The screenshot he shared included 5 million shares of GameStop common stock and 120,000 call options.
A few days ago, he posted a screenshot showing that he owned $140 million worth of GameStop stock and $120 million worth of options, with total profits reaching $85.5 million.
Gil said he believed GameStop would transform into a better company, but admitted he didn't know how it would transition. 'This has become a bet on the management, and of course Ryan Cohen,' he said. 'We have seen enough from him to believe he's clear-headed.'
He also said he reserves the right to change his mind and warned viewers to make their own investment decisions: 'These are not recommendations.'
GameStop is a struggling physical video game retailer that has been on the brink of bankruptcy. It makes money selling video games, but that business is permanently transitioning from physical goods to digital retail.
In recent years, this retailer has struggled to increase revenue because many gamers and computer game customers download games online rather than buying physical games sold by this retailer. In addition, more and more people are playing games on smartphones and tablets, and publishers are offering more free games to make money by selling virtual goods.
That's why the company's stock was heavily shorted before the January 2021 short squeeze/meme stock frenzy that sent it skyrocketing to crazy levels, only to fall back to its original price before Gil sparked another meme craze last month.
After cutting costs by multiple rounds of layoffs, store closures, and reduced marketing spending, GameStop achieved annual profit for the first time in years in 2023.
In recent years, there have been significant changes in the leadership of the company. In September last year, the board of directors of GameStop appointed Conn's as its CEO, and since then he has basically become the sole executive in power.
Editor/Lambor