GameStop Stock Alert: Sell GME Now Before The Plug Is Pulled

After weeks of teasing and social media buzz, retail investor Keith Gill, aka “Roaring Kitty,” hosted a livestream on YouTube to discuss Game stop stock (NYSE:GME). Result? GME shares are down 40%.

The plummeting share price of GameStop is the latest example of how these overhyped meme stocks continue to devour investors. It didn’t help that GameStop management pushed back the company’s earnings results just hours before Gill hosted a well-attended livestreamed event that attracted 600,000 retail investors.

As usual, GameStop’s print showed a steady decline in sales and a bleak outlook for the brick-and-mortar video game retailer. The poor financial situation is yet another reason why investors should stay away from these dangerous stocks.

Roaring kitten “Meows”

In May, Keith Gill, former marketer at MassCommon became a Day Trader and returned to social media after a three-year break. He posted a series of cryptic photos and videos, but didn’t actually say anything. Then, in the first week of June, Gill posted screenshots from his investment account showing he owned five million shares and 120,000 call options on GameStop stock. After Gill’s shares fell 40% on June 7, Gill’s stake in GameStop was worth just over $300 million.

The buzz around the return of Gill, who led a coordinated short sale of GameStop stock in 2021, skyrocketed when he announced he would host a live event on YouTube to discuss GameStop. After a half-hour delay, Gill said nothing at all about GME stock. Apart from sharing his stance on the company and saying he believed in management’s turnaround strategy, Gill’s livestream was quiet, which contributed to GameStop’s stock price falling.

Bad financial condition

Hours before Gill’s YouTube livestream, GameStop unexpectedly lowered its first-quarter financial results and announced plans to sell more shares, further diluting existing shareholders’ holdings.

The retailer’s printout showed it lost $32.3 million in the first quarter. Sales in the first three months of the year were $881.8 million, down 29% from $1.23 billion a year earlier.

GameStop provided an update on its stock sale alongside its first-quarter filing, saying it plans to continue raising cash by selling an additional 75 million shares on top of the 45 million it sold in May, which raised more than $900 million.

The company was expected to release its financial results in late June, but it abruptly scrapped pre-print sales on June 7 to capitalize on investor excitement around Gill’s live broadcast.

The profit release plan backfired, as did Gill’s YouTube event. After surging more than 180% following Gill’s return to social media, GameStop shares quickly fell to the ground.

Now both the U.S. Securities and Exchange Commission and the market regulator in Massachusetts, where Gill lives, have announced that they are investigating Roaring Kitty for possible market manipulation.

Sell ​​GME stock

Outside of Keith Gill and possibly insiders working at GameStop, is anyone making money from GME stock? The company’s business is in decline, with each earnings report worse than the last.

GameStop sells video games on discs in the age of digital downloads. The retail chain is outdated and falling apart.

There is basically no reason to own shares. Investors who buy into social media hype and temporarily drive up the share price only make Keith Gill richer. Don’t be fooled. GameStop stocks are there NO purchase.

As of the date of publication, Joel Baglole did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s Editorial Guidelines.