(Bloomberg) — GameStop Corp., a struggling video-game retailer championed by Reddit-based investors, fell as much as 11% in extended trading after posting a second-quarter loss that was wider than Wall Street projections and declining to take questions on a call with analysts.
The chain, which appointed an Amazon executive as chief executive officer in June, posted a loss of 76 cents a share, excluding some items, according to a statement Wednesday. That was larger than the 67-cent loss analysts had expected. Sales rose to $1.18 billion, beating the $1.12 billion average of estimates.
More than 22,000 people were on YouTube listening to company’s quarter conference call, which lasted less than 10 minutes. Many had been waiting to hear more about CEO Matt Furlong’s plan to turn around the struggling chain. He spoke for roughly six minutes, reviewing developments over the past months.
GameStop shares fell as much as 11% to $177 in extended trading after the call concluded. The stock was little changed at the close in New York and has risen more than 10-fold this year.
“This stock is 90% psychology/momentum and 10% fundamentals, so in many ways it doesn’t matter what the quarterly results are,” Vital Knowledge’s Adam Crisafulli said in a note. Retail traders on Reddit have been supporting the shares since last year, even though many Wall Street analysts believe the company is highly overvalued.
The larger-than-expected loss for the period ended July 31 was driven by higher-than-projected overhead, according to Michael Pachter, an analyst at Wedbush Securities.
GameStop plans to become more of an online merchant, marketing a wide swath of products beyond just video games and accessories. Activist investor Ryan Cohen, the retailer’s chairman and a major stockholder, has been steering a new course for the chain.
GameStop didn’t address a Securities and Exchange Commission investigation disclosed last quarter, when the company said it received a request from the agency’s staff for “voluntary production of documents and information concerning” trading in the stock and shares of other companies. The Grapevine, Texas-based retailer said at the time it didn’t expect any adverse fallout from the probe.
In late June, GameStop sold 5 million shares of common stock, raising about $1.13 billion before commissions and related expenses. GameStop, which has paid off all of its long-term debt, is using the proceeds for general corporate purposes and to finance growth.
(Updates with details of call starting in first paragraph.)
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