GameStop’s stock price took a nosedive Wednesday as Reddit and Wall Street tried to suss out the struggling retailer’s future.
Shares of the cult meme stock plummeted as much as 22 percent to $141.27 — the lowest price since March 5 — after GameStop reported lackluster holiday sales while refusing to take questions from analysts during its Tuesday conference call.
The Texas-based video-game chain reported net sales of $2.1 billion for the quarter ending Jan. 30, falling short of analysts’ expectations for $2.2 billion. The miss came during the holiday shopping season — a linchpin of GameStop’s business — that coincided with the launch of the new Xbox and PlayStation game consoles.
On GameStop’s brief Tuesday earnings call — which surprised analysts by skipping a Q&A session — CEO George Sherman said the company is “working to create a differentiated customer experience that positions us to access new customers, further engage with existing ones and reactivate former ones.”
The brick-and-mortar company likewise affirmed its commitment to becoming a “customer-obsessed technology company that delights gamers” — a shift championed by Chewy.com founder Ryan Cohen, whom many Reddit traders view as GameStop’s savior.
GameStop said it could sell new stock this year to fund its transformation. The retailer filed plans in December to sell up to $100 million in shares, but said it may increase that amount.
GameStop’s annual report also gave an official nod to the recent market frenzy that thrust the chain into the center of an investment revolution led by rookie traders on Reddit’s WallStreetBets forum.
The filing noted that GameStop’s stock price has seen wild movements “unrelated or disproportionate to” its actual operating performance, like when it hit an intraday peak of $483 on Jan. 28.
GameStop also acknowledged the possibility of another “short squeeze” fueling that volatility. That phenomenon occurred in January as Reddit traders pumped up GameStop shares to hammer hedge funds that had bet against the stock.
Some in the WallStreetBets crowd took GameStop’s filing as a sign that another short-squeeze rally could be in the cards.
“We’re right. They know it. The street knows,” a user named SnooWoofers9008 wrote in a popular Tuesday evening post.
But that possibility appears to be getting slimmer — the overall short interest in GameStop has dropped to an estimated 15 percent of the company’s float from 141 percent at its January peak, according to S3 Partners data.
With Post wires