Investing.com -- Shares in GameStop (NYSE:GME) were lower in premarket U.S. trading on Tuesday, pointing to further declines in the stock following a steep drop in the prior session.
GameStop's stock price slumped by 12.1% on Monday after the videogame retailer's CEO Ryan Cohen told investors that the company would shrink its network of stores as part of a push to boost profits.
Cohen also did not outline what GameStop plans to do with the almost $4 billion cash pile it has accrued from share sales in May and June, saying only that it was an "advantage" to have a stronger balance sheet. According to analysts cited by Reuters, investors were disappointed that they did not receive a more detailed strategy aimed at reinvigorating GameStop's flagging business.
Sales have been waning as more players shift online and away from the new or used videogame discs typically sold by GameStop. In an earlier-than-anticipated first-quarter earnings release this month, the firm said net sales had fallen to $881.8 million, down from $1.24 billion a year ago.
But GameStop said it had raised $933 million from a stock sale in the wake of a spike its share price last month, as well as an additional $2.14 billion in June. The moves came after Keith Gill, an investor known online as "Roaring Kitty" who helped spark a craze around so-called meme stocks in 2021, reemerged on social media in May and appeared to disclose a big bet on the company.
The shares are now trading well below their level reached after Gill's return, and have shed over 70% of their value since hitting intraday highs in 2021.
Reuters contributed to this report.