GME Stock Falls Premarket: Traders Brace For High-Stakes Earnings Report As M&A Hype Builds

• GameStop CEO Ryan Cohen said in January that the video game retailer was eyeing an acquisition of a publicly traded retail company.
• Investors would look at updates on that in the company’s quarterly report on Wednesday.
• Stocktwits sentiment for GME has been ‘bearish’ amid a fresh selloff in recent days.

GameStop Corp may have lost its crown as the top meme stock in the market, but something is brewing that might supercharge the stock – or crater it further.

The company will report its fourth-quarter earnings after market hours on Tuesday, with traders keenly awaiting updates on potential acquisition news. Flush with cash, GameStop has said it has been hunting for a “big” acquisition. 

In January, CEO Ryan Cohen had said that his company was considering buying a publicly traded company, likely in the consumer or retail industry.

The company has revealed little since then, although names such as ADT, Wayfair, Mattel, and Peloton have been floated as potential targets. 

Shares of GME declined 1.4% in premarket trading.

An acquisition announcement, or the lack of it, would likely have an impact on the stock, retail traders on Stocktwits believe, making this a high-stakes report.

“Even if we get crazy income numbers BUT no acquisition announcement, this will tank. It's basically all or nothing on Tuesday!” said a user. 

Speculation was high, and trading dynamics were complex, especially with expectations of strong numbers from GameStop during its seasonally strong period. GameStop's November-January quarter (Q4) covers the holiday period, which is strong for shopping and gifting.

It could be the “best quarter of the year and possible acquisition news,” said a user. Another bullish user wrote: “GameStop usually pumps before earnings and then sells off afterward. This time, a dip before earnings signals a big jump after the report.”

GameStop shares have declined in six of the last seven sessions, dropping 8%. Retail sentiment for the stock has declined, and it was ‘bullish’ early Monday.

Meanwhile, GameStop’s retail business has struggled of late. As its core business weakened and more stores were shuttered, GME stock ended last year 36% lower, marking its worst performance since 2022.

To be sure, there have been pockets of optimism. Some investors point to GameStop’s cost-cutting efforts, expansion into new areas such as games-related merchandise, and a growing cash reserve that includes nearly 5,000 bitcoins.

As of November last year, GameStop had cash reserves of $7.8 billion. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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