GameStop reports revenue decline, calls for 20 million share offering

(Reuters) – GameStop said on Tuesday it has filed to issue up to 20 million shares, sending its shares down more than 10 percent in extended trading after the video game retailer’s revenue fell in the second quarter as consumers increasingly shopped online.

The company, which is in the midst of a trading wave of “meme stocks,” has been struggling with declining sales of its core business of new and used video game DVDs, amid a shift to digital downloads, game streaming and e-commerce.

GameStop said it plans to use the proceeds from the offering “for general corporate purposes, including acquisitions and investments in a manner consistent with our investment policies.”

The company is also looking for stores to close and expects to close more stores than in recent years, the company said Tuesday, in line with statements made by CEO Ryan Cohen in June.

Cohen warned earlier this year of fierce competition in the game console market.

Analysts at Wedbush reported Friday that GameStop still faces a nearly insurmountable barrier to its planned return to growth as streaming services grow in popularity, and the company shows a complete lack of strategy for entering new categories with growth potential.

GameStop shares have seen significant volatility this year after online stock influencer Roaring Kitty returned to X.com after a three-year absence with a cryptic meme that many saw as a positive sign for GameStop.

Roaring Kitty played a key role in the 2021 rally in GameStop and other so-called meme stocks, which was fueled by retail investors on Reddit’s WallStreetBets forum.

GameStop reported revenue of $798.3 million for the quarter ended Aug. 3, compared with $1.16 billion a year earlier. Two analysts polled by LSEG had expected revenue of $895.7 million.

Net income was $14.8 million, or 4 cents per share, compared with a loss of $2.8 million, or 1 cent per share, a year earlier. That was helped by a 16% drop in the company’s selling and administrative expenses in the quarter.

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Shinjini Ganguli)