Gamestop Drops 39% Even With Roaring Kitty's Live Stream. What's Next For Meme stocks?

🌟🌟🌟What a big disappointment for Keith Gill aka Roaring Kitty's legion of followers today.  $GameStop(GME)$ dropped 39% even during the Live Stream of Roaring Kitty's You Tube video.

Roaring Kitty's Live Stream drew more than 600,000 views and it came after Gamestop's release of a disappointing 1Q 24 results that showed Gamestop's recovery still has more ways to go.

Gamestop reported quarterly net sales of USD 882 million, down from USD 1.24 billion year on year versus analysts' expectations of USD 900 million.  Net losses came in at USD 32.3 million or 11 cents per share, better than last year's USD 50.5 million or 17 cents per share versus analysts expectations of 10 cents per share loss.

Gamestop said that it would sell up to 75 million additional shares on top of the 45 million shares it recently sold for more than USD 900 million.  

Gamestop shares closed down 39% on Friday after soaring 47.5% on Thursday.

In other news, Meme stock $AMC Entertainment(AMC)$  also dropped 15.2% on Friday.  The fortune of AMC is very much tied to that of Gamestop.    When Gamestop rose, AMC shares rose too.  AMC has just completed a USD 250 million at the market share sale during the height of meme stock rally last month.

AMC is on a mission to pay off its debts.  Since the beginning of 2022, AMC has paid down nearly USD 1 billion of its debts, but still has USD 4.6 billion remaining.  USD 2.9 million debt is due in 2026.  AMC also had a reverse stock split of 1 for 10 in September 2023.

Taylor Swift 's New Era Concert and Beyoncé' s Renaissance Tour helped AMC to beef up its ticket sales in 2023 but the Hollywood's actors and writers strike put a dampener on AMC 's release of new movies.

Both AMC and Gamestop are at a crossroad where their industry are facing challenges.  Consumers are more likely to go for a digital streaming  subscription like $Netflix(NFLX)$  rather than going to the theatres.  

Gamestop which owned brick and mortar stores, is facing competition from digital distribution services such as those provided by $Amazon.com(AMZN)$  and $Roblox Corporation(RBLX)$ 

However it is really hard to predict the movement of meme stocks like Gamestop and AMC as they can be subjected to short squeeze, a phenomenon where the price of stock can rise to such an extent that traders who have sold short, had to purchase the stock in order to limit their losses, causing the price to rise further. 

So even though Gamestop and AMC are down on Friday, we may yet see them rise unexpectedly next week. 

Meme stocks make my heart beat faster by their roller coaster share price movement.  However they rise not because of their business fundamentals but because of the social media hype.  Let's see what drama next week will unfold. 

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