Hey everyone, Ross here! If you caught my recap yesterday, you’d know I had a rough day, losing $10,000 on GameStop. Yes, I might be the only person in the world who managed to lose money on it yesterday, aside from the short sellers. Let’s dive into the recap and talk about what went wrong.
Yesterday’s Trading Drama
Yesterday was a mess. I got stopped out of my positions not once but twice. First, I bought the break of $44 per share and got stopped out on a red candle. Then, I went in again after hours, buying the break of $47, and got stopped out on another red candle. Both times, I sized up too much for the range and ended up losing about $4,000 per trade. In total, I was down $9,000.
Despite this, the stock soared after hours. It hit $48, then $52, $54, $58, $60, $65, and finally $68. Watching this, I felt pretty down. I could have been up $20,000 if I had held my positions, but instead, I was in the red.
Early Morning Check-In
As day trading demands constant vigilance, I was up early checking the after-hours prices on my phone through Robinhood. The prices hovered around $57-$58. At around 4:30 AM, I checked again and saw it was at $65. By 6 AM, when I finally got up, the prices had begun to dump.
Q1 Earnings Report
The morning brought more surprises. GameStop reported its Q1 earnings earlier than expected, which showed a miss across the board.
- Non-GAAP EPS: -$0.12, missing by $0.03
- Revenue: $881 million, missing by $113 million
Net sales dropped compared to the previous year’s first quarter, and their net loss improved slightly but was still significant. They also announced a shelf registration, allowing them to sell up to 75 million shares, potentially raising billions of dollars at current prices. This news was a bit of a shock and added to the morning’s tumult.
Shelf Registration
The shelf registration is worth noting. GameStop now has the right to sell 75 million shares, which would dilute the existing float by roughly 25%. Their previous offer raised $1 billion from 45 million shares. This kind of dilution can make day trading more volatile, especially when you’re unsure if the company is dumping shares on the open market.
Roaring Kitty’s Live Stream
Roaring Kitty, a known GameStop bull, had a YouTube live stream scheduled for 12 PM. The anticipation was high and added fuel to the already volatile stock. However, the earnings miss and the shelf registration announcement took some wind out of the sails.
Seeking a Thesis
I need a clear investment thesis for GameStop. At current prices, I don’t see it as a deep value stock. The short interest is around 20%, which doesn’t seem enough to trigger a massive squeeze. Some folks mention Roaring Kitty’s $12 million worth of calls, which might force the buying of 12 million shares. However, hedge funds could already own those shares, so I remain skeptical about their impact.
Conclusion
Day trading requires quick reactions and constant monitoring. Yesterday was tough, but it’s all part of the journey. Today, I’ll be watching the market closely, especially the 12 PM live stream, and seeing how everything unfolds. Whether it’s GameStop or another stock showing momentum, I’ll be ready to take advantage.
I’ll manage risk carefully, especially with the uncertainty around GameStop’s potential share selling. Keep an eye on the news, stay sharp, and happy trading!
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Disclaimer: The results shared are based on my personal trading experiences and are not typical. Trading involves significant risk, and past performance is not indicative of future results. Always practice in a simulator before trading with real money.