GameStop stock tumbled for the third day in a row on Thursday after the video game retailer announced a new funding round and missed sales estimates earlier this week.
GameStop late Tuesday reported earnings of 17 cents per share, improved from a loss of 12 cents per share last year. Revenue fell 17% to $732.4 million.
FactSet analysts expected earnings of 8 cents per share on $750 million in sales.
Hardware, gaming consoles and accessories sales came in at $345.3 million for the quarter. Software and video game sales were $175.6 million. Collectibles sales, including toys, trading cards and apparel, were $211.5 million.
GameStop said that it completed the divestiture of its Canada business on May 4.
GameStop Stock
GME stock fell 5.3% on Wednesday following the report.
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Shares saw a much larger drop Thursday after GameStop announced a new private offering of $1.75 billion in convertible senior notes, which are set to mature in 2032.
GameStop plans to use the proceeds for general corporate purposes, including making investments "in a manner consistent with GameStop's Investment Policy" and potential acquisitions. That could potentially include more bitcoin purchases.
The company in March updated its investment policy to include the cryptocurrency as a treasury reserve asset, which coincided with a $1.3 billion convertible note offering. GameStop in late May revealed that it purchased 4,710 bitcoin.
GameStop reported $6.385 billion in cash at the end of the first quarter, up from $999.9 million a year ago. Long-term debt was $1.48 billion, vs. $14.9 million a year earlier.
GME Skids Below Key Averages
GME shares unraveled 22.5% Thursday, breaking up a base-building project and skidding back below the stock's 50-day and 200-day moving averages.
That left shares down more than 29% so far this year.
GameStop stock has a 21-day average true range ratio of 5.4%.
The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
