Shares of GameStop Corp. continued their slump on Wednesday, with last week's unprecedented rise now a distant memory, according to a Bloomberg report today.
The stock is down 7% to $83.80 in electronic trading and is now losing more than 80% of the intra-conference record set last Thursday at $483.
GameStop, which has been gaining traction from investor groups using Reddit's r/wallstreetbets to attack short-selling hedge funds, plummeted 60% on Tuesday and has now written off more than $27 billion in value in the US market after last week's record high.
Several other companies that have come to the forefront of the Reddit investor community – such as the movie chain AMC Entertainment Holdings Inc. and the clothing chain Express Inc. among other things – also plummeted, with AMC losing an additional 11% in online trading today.
GameStop has now lost more than 80% of the profits fueled by Reddit's attack on short sellers. Despite the rapid losses, the company continues to gain 377% since the beginning of the year.
Most major stock trading brokers have already banned the trading of Gamestop, with Revolut the latest ones to take action.
How is GameStop really doing?
Not that great. According to its fiscal third-quarter earnings report from December, GameStop's sales declined 30% from the previous year. And that was during a pandemic when the online video game industry experienced months of increased revenue as Americans stayed home and played games because of lockdowns. But sales at retail stores suffered due to locations closing or the limited flow of customers as a result of those same lockdowns.
Meanwhile, digital sales for games reached new heights. Major publishers such as Sony, EA, and Take-Two reported that digital purchases surpassed physical sales in 2020, according to Daniel Ahmad, an analyst at Niko Partners. Microsoft's Game Pass, which lets gamers access more than 100 games for $15 a month, hit 18 million subscribers, CEO Satya Nadella said on the company's second-quarter earnings conference call.