NEWS
Gill Fails To Deliver The GameStop Gains

Chaos ensued this morning ahead of Roaring Kitty’s live stream, with GameStop releasing earnings and a new share offering. Meanwhile, hotter-than-expected nonfarm payroll data threw a wrench into the “softening labor market narrative” and had rates roaring back. Let’s see what else you missed. 👀

Today's issue covers a day of GameStop surprises, the attention economy’s latest push, and one stock getting a major lyft. 📰

Here's today's heat map:

4 of 11 sectors closed green. Financials (+0.46%) led, & utilities (-1.09%) lagged. 💚

The Reserve Bank of India held interest rates steady for the eighth meeting while raising its growth outlook. Two of the six members voted for a 25 bp cut, as the current election upset adds uncertainty to the economy’s outlook. 🔺

Nonfarm payrolls came in hotter than expected today, spooking the bond market and causing rates to reverse their multi-day decline. Despite the volatility in month-to-month data points, the trend in most labor market indicators remains clear: the market is softening. 🫠

Crude oil and the broader energy complex posted their third straight weekly loss, as supply is expected to increase while demand remains uncertain. OPEC+ production increases and weak U.S. economic data remain near-term headwinds for the market. 🛢️

Ski resort owner Vail Resorts melted to nearly 4-year lows after its earnings and sales failed to meet Wall Street’s estimates. ⛷️

Software maker Samsara slumped 12% after its disappointing second-quarter and full-year financial forecasts outweighed its top and bottom-line beats. 🔻

Oddity Tech rose 21% after the beauty and wellness company announced a $150 million share buyback program and boosted its second-quarter outlook. 💰

Semiconductor manufacturer Semtech’s shares were slammed by 18% after announcing its CEO Paul Pickle had left the company, following differences in approach between him and the Board’s vision for creating shareholder value. 👨‍💼

Biopharma stock Geron jumped 18% after the U.S. Food and Drug Admin (FDA) approved its blood disorder treatment earlier than expected. 💉

Satellite imagery provider Planet Labs rebounded 11% after reporting a narrower-than-expected loss and topping revenue estimates marginally. 🛰️

Other active symbols: $AMC (-15.20%), $FFIE (+12.24%), $NVAX (-7.08%), $LPA (-48.03%), $PLTR (-2.02%), and $BNRG (-7.48%). 🔥

Here are the closing prices: 

EARNINGS
Only Cohen Can Solve GameStop’s Core Problem

Yesterday, we left the GameStop saga at a point when it appeared that Keith Gill (AKA Roaring Kitty) was all but set to become a billionaire, as shares climbed sharply in anticipation of today’s live stream event at 12:00 pm ET. 🧑‍💻

Unfortunately, that enthusiasm was interrupted by an early-morning release of the company’s earnings and plans to sell an additional 75 million shares (on top of the 45 million shares it sold during May).

The company was scheduled to report results on Tuesday after the bell; however, with this week’s resurgence, it likely wanted to take advantage of its good fortune by raising more capital at elevated prices. 🤑

I believe they technically had to release their earnings simultaneously in order to stay good in the eyes of the Securities and Exchange Commission (SEC), which would classify their earnings as material information in investors’ decision process. It honestly would have been worse if they registered to sell more shares and then released their terrible results a few days later.

But speaking of terrible results, the struggling retailer’s sales fell 29% YoY, a much steeper drop than Wall Street expected. While its net loss did narrow YoY, the point is its core business is still not profitable. 👎

Like the previous four quarters, management opted not to hold an earnings call, likely because they still don’t have any answers for analysts’ and retail investors/traders’ most pressing questions.

As a result, investors turned their attention toward Roaring Kitty’s live stream, hoping he could provide some much-needed answers.

And…answers he did not provide. Despite over 500,000 concurrent watchers tuning in and over 2,000,000 million views accruing on the replay since then, Keith Gill’s return to YouTube was pretty lackluster. 😒

One positive aspect of this whole debacle was that the Stocktwits product team unleashed its live earnings call feature directly on the $GME symbol page and quickly piped in the live stream for Roaring Kitty. That racked up tens of thousands more views as the community reacted to the video in real-time. 🫨

Nonetheless, rather than providing the clarity investors had hoped for, Keith Gill used his return to YouTube to mostly joke around in what felt like a streamer’s “just chatting” video. And the market seemed to agree with that assessment, as GameStop shares slid throughout and closed at the day's lows. 🔻

The only real update provided was Gill sharing a live look at his E*Trade account, which showed him maintaining his position (albeit with much fewer gains than before). And that his primary thesis around the stock is that CEO Ryan Cohen and his group of trusted fellows will “figure it out.”

That’s the bet he’s essentially making…and it seems many traders and investors aren’t comfortable betting the farm on the current executive team. 🤷

That’s especially true given that not much has changed from a business fundamentals perspective since Cohen took over. Sure, they’ve cut costs to lengthen their runway, but their core issue remains a lack of revenue growth. And until they solve that, many believe they’re a “BlockBuster” 2.0 in the making.

I joined Yahoo Finance this afternoon to discuss exactly that. 👇

Ultimately, the stock was down 40% today, and Stocktwits sentiment soured into “extremely bearish” territory due to the continued lack of clarity around the business and Roaring Kitty’s real motivations. 🐻

Many people don’t understand why Gill is betting on management’s turnaround prowess with short-dated call options. His investment vehicle and trading approach don’t seem to match what he’s telling the public.

Sure, he could be playing the long game by anticipating that his short-term positions would help fuel the stock and let the company raise new capital at elevated prices, therefore lengthening its runway to stage a longer-term turnaround. But many aren’t giving him the benefit of the doubt. 🧠

Anyway, we’ll have to wait and see how things play out over the weekend and into next week. What’s clear is that with Roaring Kitty back in the mainstream, volatility in GameStop shares is here to stay. So investors and traders need to know the game they’re playing and manage their risk appropriately.

Because the game is not stopping anytime soon in GameStop… 🤪