GameStop Soars to Erase $4 Billion Hole as Meme Stocks Roar
(Bloomberg) -- GameStop Corp. rallied to erase its earnings-led slump as Reddit-favorite stocks surged and traders touted the company’s ongoing corporate transformation.
The video-game retailer rallied 53% to $183.75, recouping all of its $4.3 billion drop after quarterly earnings failed to answer Wall Street’s most pressing questions on the company’s turnaround. Fellow retail darlings like movie theater company AMC Entertainment Holdings Inc. and headphone maker Koss Corp. followed GameStop higher on Thursday.
Shares of Grapevine, Texas-based GameStop have been a poster child for Reddit-armed retail traders looking to rally against short sellers. Thursday’s rally came amid a flood of trading activity, with more than 49 million shares changing hands -- almost three times the amount that has been traded in the past week.
The company’s ongoing shake-up, led by activist investor and board member Ryan Cohen, to make the retailer a tech heavyweight has continued to gain strength. The company announced a slew of new hires to help it re-shape its image and business on Tuesday, and Cohen has continued to replace members of its board with no plans to slow down.
The company has made “significant changes” to its board since June 2020 and expects “to experience additional changes” at its annual meeting this year, GameStop said in a regulatory filing on Tuesday, listing eight members would depart.
The retailer reported a quarterly profit that missed the average analyst forecast despite expectations for new gaming consoles to fuel sales. Net sales fell 3.3% to $2.12 billion in the quarter, short of the $2.24 billion estimate, to mark the 12th consecutive quarter of slowing sales. The results led to a 34% slump in the shares on Wednesday.
©2021 Bloomberg L.P.