Plano, Texas – GameStop shares took a significant hit in premarket trading on Friday following the announcement from the video game retailer about its plans to sell securities and the release of preliminary first-quarter results showing a decline in sales.
The company reported that it anticipates net sales for the quarter to be between $872 million and $892 million, a drop from the $1.237 billion reported in the same period last year. This is below the expectations of two analysts surveyed by FactSet, who had predicted revenue of around $1 billion for the first quarter.
Facing tough competition from e-commerce rivals, GameStop has been struggling to maintain its share in the brick-and-mortar video game market. The company’s decision to offer securities for an undisclosed amount is part of its strategy to navigate these challenges.
The announcement comes on the heels of a recent surge in GameStop’s stock price earlier in the week, attributed to the resurgence of “Roaring Kitty,” a figure behind the massive short squeeze of 2021 that led to a retail trading frenzy. However, the rally was short-lived, with far fewer retail investors participating compared to the meme stock frenzy of three years ago.
The potential securities offering from GameStop could include a mix of common stock, preferred shares, depositary shares, warrants, purchase contracts, units, and subscription rights that are convertible into common stock. The company’s move reflects its efforts to adapt to a rapidly evolving retail landscape in the gaming industry.
This situation is evolving, and updates will likely provide more insights into GameStop’s future plans and strategies in response to the changing market dynamics. Investors and industry observers will be closely monitoring any developments coming from the company in the coming days.