The stock market’s rally to new highs offers upside for companies with strong growth prospects. Conversely, market shenanigans are on the rise. Pump and dump-like activities are even repeating. For example, the meme stock speculation of 2021 made its return twice in the last month.
When Roaring Kitty posted a simple tweet, GameStop (GME) stock soared from below $10 in April to as high as $65.00. The retailer of used gaming goods took advantage of the stock’s rise by selling shares, diluting shareholders, and raising nearly $1 billion. In an irrational twist, markets reacted to the cash raised as a bullish development.
A day before investor Roaring Kitty said he would live stream on Google’s (GOOG) YouTube, GME stock rallied again. This time, shares traded as high as $46.60 on June 6. Once again, management took advantage of the market’s bullishness by reporting quarterly results earlier and announcing another stock sale plan.
The company posted a non-GAAP EPS of -$0.12. Revenue slumped by 28.7% Y/Y to $881.8 million. The firm adjusted its non-GAAP results with items like $4.4 million in transformation costs. The operating loss before adjustments topped $55 million.
Speculators will thrive from the wild price swing in GME stock. Investors should ignore this company and look elsewhere for companies that have better long-term prospects.
Tech Insider
