Meme stock GameStop slumps as revenue drop fans turnaround doubts

Shares of GameStop, a widely watched meme stock, tumbled 10 per cent in premarket trading on Wednesday after the video game retailer reported a bigger drop in quarterly revenue, questioning its ability to revitalize its business.
The company, which is feverishly tracked by retail investors following a meme stock frenzy in early 2021 that sent its shares to dizzying levels, has been trying to restructure itself by operating a smaller network of stores and focusing on selling more value-added items to boost sales and profitability.
The 31 per cent slide in GameStop’s revenue in the most recent quarter overshadowed a swing to net profit. It also announced a plan to sell up to 20 million shares to fund acquisitions.
GameStop has raised a little over $3 billion through share sales in May and June, taking advantage of wild swings in its stock following bullish bets by Keith Gill, also known as “Roaring Kitty”, who has been a key figure in the so-called “Reddit rally.”
The stock more than doubled over a few days in May after Gill returned from a three-year hiatus and then crashed 40 per cent in June after Gill’s livestream failed to drum up investor interest.
Still, the stock is up about 34 per cent this year through Tuesday. It was trading at $21.14 in premarket trading on Wednesday.
GameStop’s stock reached an intra-day peak of nearly $121 in January 2021 from about $10 a few days earlier, in a roller-coaster ride for investors before crashing nearly 90 per cent in the following month.