(Bloomberg) -- GameStop Corp.’s meteoric rally this year as one of the first meme-stock icons may be losing steam after the company said it planned to sell more shares and offered few details about its turnaround strategy.
The Grapevine, Texas-based video-game retailer fell 27% to $220.39 on Thursday in the biggest drop since March 24. The stock, which was among the first to get a huge Reddit and social media following earlier this year, has surged about 1,100% in 2021 as retail investors banded together to take on short sellers and amid optimism on a corporate turnaround.
With the stock about 50% from its intraday record high of $483, investors are still waiting for a clear strategy from newly appointed chairman and activist investor Ryan Cohen. GameStop did announce a pair of new leaders from Amazon.com Inc. to help with turning the brick-and-mortar chain into an e-commerce powerhouse.
“Investors deserve more than memes to value a company’s fundamental, long-term prospects,” Baird analyst Colin Sebastian wrote in a note. While clearly laying out the groundwork for digital transformation, the board is not ready to disclose details on some challenges, he said.
News that GameStop may offer another 5 million shares and that past trading activity is being investigated by the Securities and Exchange Commission is also weighing on its stock.