The meme-favorite GameStop (NYSE:GME) plunged in trading on Friday after revealing plans for a new share offering, and reporting a dip in first-quarter revenues.
In a regulatory filing, the company disclosed intentions to sell up to 45 million class A common shares through an at-the-market offering, following a surge of over 50% earlier in the week amid renewed meme stock hype.
GameStop’s Preliminary Q1 Results
In addition, the company announced its preliminary Q1 results, with net sales expected to fall within the range of $0.872 billion to $0.892 billion, compared to $1.24 billion in the same period last year, below Street estimates of $1.1 billion.
However, GME’s net loss in the first quarter is expected to range between $27 million and $37 million, an improvement from the $50.5 million loss in the same period last year.
The brick-and-mortar retailer is grappling with increasing competition from e-commerce rivals and had previously disclosed job cuts in late March as part of cost reduction measures.
Is GME a Good Buy Right Now?
Only one analyst has covered GME stock over the past three months and is bearish about the stock with a Sell rating and a GME price target of $5.60, implying a downside potential of 79.8% from current levels. Year-to-date, GME has increased by more than 50%.
