It’s been a wild two weeks for GameStop shares, with the traditional “meme stock” showing back up on radars’ after rallying nearly 50% ahead of its earnings report. 👀
There were several theories for why the stock was taking off, including:
- Institutions covering shorts ahead of a potentially good earnings report.
- An institution building an outsized position in the stock ahead of earnings.
- Retail traders getting involved again as more speculative behavior took hold of the market.
Unfortunately, today’s earnings didn’t provide any color on why it recently rallied. As a matter of fact, it didn’t offer color on much of anything. 🤔
Although the company’s net loss narrowed to $0.01 per share and was breakeven on an adjusted basis, its revenues stumbled again and missed expectations by about 10%.
If you didn’t know any better, you might’ve thought this quarter’s press release was the same as the last one. Revenues are stagnant, the company is cutting costs to maintain its near-breakeven status, and it has ample cash on hand to stage its turnaround. 😴
Stability is great, but investors continue looking for the catalyst to grow its sales again. It can only cut costs so far, and its recent quarters are beginning to show diminishing returns on that front. Eventually, it will need to grow revenues, and its current efforts don’t seem to be doing the trick. 🤷
Traders on both sides of the tape were left disappointed, with steam coming out of $GME shares following a short bout of after-hours volatility. As for the stock’s current prospects, technical analysts say it’s having trouble breaking through previous support near $15-$16. And that until the stock can clear that level decisively and stay above it, the bears remain in control. 🐻
Nonetheless, traders and investors continue to play the “meme stock,” betting on its ability to get its core business going again. Message activity and overall sentiment remain elevated on the Stocktwits platform. 🎰