Why GameStop Stock Is Down By 9% Today

GameStop Stock Dives After Q2 Earnings Report

Shares of GameStop found themselves under strong pressure after the company released its second-quarter report. GameStop reported revenue of $1.18 billion and GAAP loss of $0.85 per share, beating analyst estimates on revenue and missing them on earnings.

The company finished the second quarter with $1.72 billion of cash on the balance sheet which was boosted by the proceeds from its June at-the-market program. The company raised about $1.1 billion in net proceeds after selling 5 million shares of its common stock.

Once again, GameStop did not take questions from analysts during its earnings call. This is a bearish catalyst for the stock as it shows that the company’s management is not ready to take questions on valuation and GameStop’s plans to return to profitability.

What’s Next For GameStop Stock?

Analysts expect that GameStop will report a loss of $0.56 per share in the current year and a loss of $0.03 per share in the next year. It should be noted that analyst estimates have been trending lower in recent weeks, but it is not clear whether it had any impact on the stock which remains dependent on market mood towards “meme stocks”.

The company’s valuation remains detached from the fundamental reality. The recent rally, which happened at the end of August and took the stock from the $160 level to the $225 level, was not as strong as the previous rallies in March or late May which suggests that the stock failed to get enough attention from retail traders.

That said, the stock needs more sellers to gain downside momentum. It remains to be seen whether such sellers will emerge in the upcoming trading sessions as some retail traders are determined to hold the “meme” stock while short-sellers have been burned several times in violent short-squeeze moves.

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