For a while Friday morning, it looked like the GameStop stock price might rise enough to turn Keith Gill (better known as Roaring Kitty and DeepFuckingValue) into a billionaire before markets even opened in the United States.
The meme stock trader and financial influencer shared screenshots of his massive GME position in the Superstonk subreddit. And if GME had reached $65, the position that began with an investment of $116 million would have ballooned to be worth $1 billion.
But then the video game retailer, which has become the ultimate meme stock, released its first-quarter earnings report four days early. Not a complete surprise, the company released preliminary first-quarter results last month.
However, investors will still have to wait until next week to hear from GameStop executives. GameStop’s press release was clear: “The Company will not be holding a conference call today.”
The US video game retailer reported net sales of $881 million, down 29% from $1.2 billion in the same period last year. The sales decline was more severe than Wall Street analysts expected. And now, at the time of writing, GME shares are trading 24% lower than the previous close of $46.55.
It wasn’t all bad news. GameStop saw first-quarter losses fall from $51 million at this time last year to $32 million. The company also noted that its liabilities decreased from $1.3 billion to $848 million and that its cash and cash equivalents remained about the same as last year.
The company also provided an update on the share sale. GameStop said in May it planned to sell 45 million shares. The video game retailer has now said it will sell another $75 million on top of its previous sale, through which it raised $933 million, according to a prospectus filed with the SEC.
But meme fans on the Superstonk subreddit seem undeterred.
A Reddit member shared a screenshot of a popular 2022 tweet from Larry Cheng, co-founder of Volition Capital and GameStop board member. In it, he shared his theory that companies erode trust when they share potential good news early and actual bad news late. But a company can build trust with investors by sharing potential bad news early and making sure good news arrives on time.
Another user guessed that it could be to make way for the new stock offering.
“Maybe they want to clear the ground for another stock offering,” they wrote. “Once official profits are eliminated, the calm period ends and insiders can buy too.”
