GameStop Shares Tumble In Premarket As Investors React To Q3 Earnings

In Thursday’s premarket session, GME shares experienced a sharp drop following the video game retailer’s earnings report, which revealed Q3 revenue falling short of analyst forecasts.

GameStop Q3 Results Didn’t Please Investors

Under the new leadership of CEO Ryan Cohen, GameStop faces ongoing challenges as customers shift towards downloading games online. The company now contends with a market where many gamers opt for free downloads from app stores. Cohen has previously cautioned employees about the necessity of reducing expenses for the business’s survival.

GameStop’s board has also approved a new investment policy, allowing it to use its cash to buy stocks and make other investments.

As the results came out post-market on Wednesday, news around it sent the stock plummeting over 8% in premarket trading.

More on the results here: GameStop Q3 Earnings Highlights: Revenue Beat, EPS Beat, Losses Continue To Improve Each Quarter.

In the days leading up to the announcement of the results, GameStop’s stock saw an increase. A fraction of the value from its peak in January 2021, when it was a popular meme stock, still remains.

GME Stock Technical Trends – Bearish

The technicals also indicate a bearish trend for GameStop’s stock. The 100-day SMA recently crossed below the 200-day SMA, indicating a bearish sentiment among traders.

The RSI in the previous chart also shows GME stock flirting with the 70 level, indicating it is on the verge of being overbought. An overbought security indicates a stock is trading above its intrinsic value, and hence a pullback may occur from its price trend.

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