GameStop Flat as Meme Stock Craze Powers Down

GameStop (GME) shares showed little movement on Tuesday, trading at $24.96, down about 1% since Monday’s close after making modest shifts up and down the chart.

This comes after what some traders viewed as a lackluster shareholders meeting on Monday that left many investors disappointed and without concrete updates on the company’s future plans.

The highly anticipated annual meeting, which had been rescheduled due to technical issues last week—blamed on overwhelming demand from traders who wanted to tune in—concluded without providing any new strategic insights. The meeting lasted about 30 minutes and did not allow shareholders to ask questions. 

GameStop CEO Ryan Cohen reiterated the company’s focus on cost-cutting and profit-boosting measures, suggesting that more store closures might be forthcoming.

“Revenues without profits and prospects of future cash flows are of no value to shareholders,” Cohen stated. “This means a smaller network of stores with an expanded assortment of higher value items that fit into our trade-in model.”

Cohen emphasized the importance of a “strong balance sheet,” highlighting GameStop’s $1 billion in cash and cash equivalents as of May 4. He also discussed the challenges posed by the current economic climate, marked by high inflation and rising interest rates, which require higher returns on investments.

“Under the current interest rates, an investment made in today’s economic climate must bear a higher return threshold,” Cohen added.

Some traders had expected GameStop to touch on the actions of influencer and trader Roaring Kitty, aka Keith Gill, who recently upped his GME holdings to about 9 million shares. Unconfirmed rumors ahead of the meeting pointed to Gill being named to the board, but that ultimately never happened. Cohen only said the firm wouldn’t lean into the hype.

“As my father always said, actions speak louder than words,” he said on the call. “We are focused on building shareholder value over the long term. We are not here to make promises or hype things up, we’re here to work.”

Adding to the muted atmosphere, Roaring Kitty has remained relatively quiet in recent days. Known for his pivotal role in the 2021 GameStop trading frenzy, Gill’s recent re-emergence stirred some excitement. However, the meme stock revival appears to be losing steam.

GameStop’s stock fell 12.1% on Monday following the meeting, and at one point dropped as much as 17% to $23.79.

The company’s struggles with transitioning to online gaming and moving away from physical stores remain a significant hurdle. Investors continue to pin their hopes on Cohen’s leadership to navigate these challenges.

Despite the recent setbacks, GameStop’s stock has seen a resurgence. It doubled in May and gained in seven of the past eight weeks. Year to date, the stock is up approximately 44%.

In a bid to strengthen its financial position, GameStop raised over $2 billion through an at-the-market equity sale. The company plans to use these funds for general corporate purposes, including potential acquisitions and investments.

Edited by Andrew Hayward