Shares of GameStop Corp. extended their slide toward a 3 1/2-month low Wednesday, as investors prepared for the videogame retailer’s fiscal second-quarter report due out after the closing bell.
The “meme stock”
GME,
slumped 3.5% in afternoon trading, and was headed for a sixth straight loss, and 14th loss over the past 15 sessions. It has tumbled 23.1% over the latest losing streak and plunged 42.5% over the past 15 trading days.
GameStop is scheduled to report results for the quarter through July just after 4 p.m. Eastern. Analysts surveyed by FactSet expect the company to report a per-share loss of 42 cents, which would be the sixth consecutive quarterly loss.
The FactSet revenue consensus is $1.27 billion, up 7% from a year ago.
Both the per-share loss and revenue consensus have remain unchanged since the end of June, according to FactSet.
The company has reported a wider-than-expected loss the previous four quarters, even as it has beat revenue expectations the past five quarters. The five-quarter streak of beating revenue estimates followed a nine-quarter streak of misses.
Although GameStop’s stock has rallied the day after the previous two earnings reports, history suggests investors have a reason to anxious.
The day after the previous 20 quarterly reports, the stock has fallen 14 times, by an average of 14.6%, according to a MarketWatch analysis of FactSet data. The six times the stock rose, it gained 4%.
Meanwhile, a stock-options strategy known as a straddle has been priced for a bigger than usual one-day, post-earnings move. Straddles are pure volatility plays that involve the simultaneous purchase of bullish (calls) and bearish (puts) options with at-the-money strikes expiring Friday.
For GameStop shares, straddles are priced for the stock to move $3.22, or 13.3% at current prices, in either direction on Thursday, according to data provided by Option Research & Technology Services (ORATS) Principal Matt Amberson.
That compares with the average one-day post-earnings move, on an absolute basis, of 11.4% over the past 20 quarters, and of 12.6% over the past 12 quarters, according to FactSet data.
GameStop shares, which were on track for the lowest close since May 24, have declined 20.1% since the company reported first-quarter results after the June 1 closing bell, while fellow meme stocks AMC Entertainment Holdings Inc.
AMC,
has gained 3.3% and Bed Bath & Beyond Inc.
BBBY,
has lost 2.7% over the same time. The S&P 500 index
SPX,
has lost 3.6% since June 1.
Source: https://www.marketwatch.com/story/gamestop-stock-heads-for-6th-straight-drop-ahead-of-earnings-report-11662563937?siteid=yhoof2&yptr=yahoo