GameStop stock soars to its lowest ever quarterly loss

GameStop stock soars to its lowest ever quarterly loss

Meme-stock darling GameStop Corp. reported its third-quarter results after the market closes on Wednesday, with analysts looking for a narrowing loss from the videogame retailer.

GameStop GME, like its fellow meme stock, AMC Entertainment Holdings Inc., was a major beneficiary of the meme-stock buying frenzy in January 2021, which sent the company's shares skyrocketing to dizzying heights. Between January and March 2021, GameStop's stock price went more than 1,200% and the company's market cap exceeded $17 billion.

The stock of GameStop has fallen 29.3% this year, surpassing the S&P 500 s SPX, a decline of 15.5%, and the company's market cap is now around $8.4 billion. AMC's stock is down 52.3% in 2022.

Analysts are expecting GameStop to report a net loss of $94 million, or 29 cents a share, compared to a previous year s net loss of $105 million or $1.39 cents a share. Analysts expect third-quarter revenue to be $1.4 billion, compared to $1.3 billion in the same period last year.

One of three analysts surveyed by FactSet has a hold rating and two have a sell rating for GameStop.

In September, GameStop's stock surged after the company reported a narrower than expected loss and announced a partnership with the FTX exchange. Last month FTX, which was once the world's third-largest exchange, filed for bankruptcy after a collapse that sent shockwaves through the industry.

On November 11, GameStop said it was winding down its relationship and pilot partnership to market gift cards with FTX and that it would give refunds to affected customers.

Now read: AMC stock spikes up in volatile trading, other meme stocks also rally.

The heady days of early 2021 are far in the rearview mirror, but GameStop's stock still reflects meme-stock trends. In the past, GameStop enjoyed its longest winning streak in over a decade, boosted by a bullish post on the WallStreetBets subreddit.

GameStop was able to rally alongside meme stocks AMC, AMC Preferred Equity Units APE, and Bed Bath Beyond Inc. BBBY last week, bucking weakness in the broader stock market.

The fundamentals of GameStop have been questioned by critics. In August, New Constructs added GameStop to its list of zombie stocks and highlighted the company's cash burn as an issue.

GameStop ended its quarter with cash and equivalents of $908.9 million. The company said it ended the quarter with no debt other than a low-interest loan related to the French government's response to the Pandemic.

Last month, Bloomberg reported that billionaire investor Carl Icahn is shorting GameStop. According to people familiar with the matter, Bloomberg reported that Icahn began shorting GameStop in January 2021, around the height of the meme-stock frenzy, and still holds a large position.

Icahn has not responded to a request for comment from MarketWatch.