GameStop Corp (NYSE:GME) stock plunges 14.88% (As on September 11, 11:32:26 AM UTC-4, Source: Google Finance) after the company said it would issue more shares despite posting a slide in second-quarter revenue. The company, which has become known as a focal point of the “meme-stock” craze at the beginning of the decade, said that it would use the proceeds from issuing up to 20 million new shares to fund “general corporate purposes,” including potential “acquisitions and investments in a manner consistent with the investment policy. The company is struggling with declining sales in its primary business of selling new and used video game discs due to a shift to digital downloads, game streaming, and e-commerce shopping. The company is also identifying stores for closure and expects to shut down more outlets than it did in the past few years. The company has warned of intense competition in the gaming console market earlier this year. Analysts at Wedbush said on Friday GameStop continues to face a near insurmountable barrier to its planned return to growth as streaming services proliferate, while the company shows a total lack of any strategy to enter new categories with growth potential.

Further, net income came in at $14.8 million for the three-months to June, a significant turnaround from a $2.8 million loss in the same period last year. Cash, cash equivalents, and marketable securities were $4.2 billion at the close of the quarter. Selling, general and administrative (“SG&A”) expenses were $270.8 million, or 33.9% of net sales for the second quarter, compared to $322.5 million, or 27.7% of net sales, in the prior year’s second quarter. The company generated $68.6 million from operating activities, a notable improvement from the negative $109.1 million in the same period last year.

GME in the second quarter of FY 24 has reported the adjusted earnings per share of 15 cents, beating the analysts’ estimates for the adjusted earnings per share of 13 cents. The company had reported the adjusted revenue decline of 31 percent to $2.48 billion in the second quarter of FY 24, beating the analysts’ estimates for revenue of $2.47 billion. Sales across all categories, including hardware, software, and collectibles, have declined. The decline in net sales poses a significant challenge, reflecting the ongoing struggles in the retail sector, particularly in the video game industry. The company’s gross profit also fell to $248.8 million from $305.9 million, indicating pressure on margins.