Gamestop nyse Gme Stock Tumbles Amid Q1 Profit Warning and Share Offering Plans

GameStop (NYSE: GME) Stock Tumbles Amid Q1 Profit Warning and Share Offering Plans

GameStop (NYSE: GME) stock dropped over 4% in early trading Monday after the video game retailer issued a profit warning and revealed plans for more share offerings.

GameStop (GME) released preliminary financial results for its first quarter on Friday, revealing a significant drop in net sales and a narrowed net loss compared to the last year in the same period. 

The video game retailer forecasts net sales to range between $872 million and $892 million, a decrease from $1.24 billion in Q1 2023 and below analysts’ estimate of $1.045 billion. 

In addition, Gamestop expects a reduced net loss, projected to range between $27 million and $37 million. This marks an improvement from the net loss of $50.5 million incurred during the same period in the previous year. This forecast aligns with an estimated net loss of $28 million.

Moreover, GameStop forecasts its cash and equivalents to range from $1.073 billion to $1.093 billion, down from $1.31 billion in the first quarter of 2023. The company has yet to announce detailed financial reporting.

GameStop Stock Offerings

In addition to its financial disclosures, GameStop filed for two separate stock offerings. The first filing involves issuing 45 million shares of common stock through Jefferies, with proceeds earmarked for general corporate purposes, which may include acquisitions and investments.

Furthermore, the company filed a shelf registration statement with the SEC Friday morning, allowing it to issue additional stock in the future through one or multiple offering rounds.

According to the filing, the GameStop charter enables it to issue up to 1 billion common stock shares and up to 5 million preferred stock. GameStop had 306.187 million common stock shares (GME) outstanding as of May 4.

GameStop plans to use the future proceeds from these stock sales for working capital and general corporate purposes. The company also indicated potential investments in certificates of deposit (CDs) and U.S. Treasury securities.

GameStop (NYSE: GME) Stock Reaction

As of 10:28 a.m. (Eastern Time) Monday, GME stock traded at $21.24, marking a 4.37% decrease compared to the previous trading session.