Key Takeaways
- GameStop shares plummeted in premarket trading Wednesday after the brick-and-mortar video gamer retailer announced a 20 million share offering and reported a 31% drop in quarterly sales, as consumers continue to pivot from physical discs to digital downloads and game streaming.
- Wednesday’s projected earnings-driven drop opens the door for a potential breakdown below the lower trendline of a symmetrical triangle.
- Investors should monitor key post-earnings chart levels at $18.50, $15.25 and $13.25, while also eyeing $30.50 as a bullish target during meme-fueled rallies.
GameStop (GME) shares plunged in premarket trading on Wednesday after the brick-and-mortar video gamer retailer announced a 20 million share offering and reported a 31% drop in quarterly sales, as consumers continue to pivot from physical discs to digital downloads and game streaming.
The company’s shares, which shot to prominence during a pandemic-era meme stock frenzy, have seen significant price fluctuations this year as influential trader Keith Gill—also known as “Roaring Kitty”—made several cryptic posts about the retailer following a three-year hiatus.
GameStop shares were down 13% at $20.40 about 45 minutes before Wednesday’s opening bell.
Below, we’ll take a look at what the technicals are saying on GameStop’s chart and identify key post-earnings price levels that investors will likely be watching.
Symmetrical Triangle Breakdown Taking Shape
GameStop shares have oscillated within a symmetrical triangle since meme-driven volatility subsided in early June, with bulls successfully defending the pattern’s lower trendline twice throughout August.
More recently, a three day winning streak up to the triangle’s top trendline came to an abrupt end on Tuesday, indicating uncertainty ahead of the video game retailer’s quarterly results.
Indeed, Wednesday’s projected earnings-driven drop opens the door for a potential breakdown below the pattern.
Key Price Levels to Watch
Upon a breakdown below the symmetrical triangle’s lower trendline, investors should monitor three important price levels.
Firstly, it’s worth watching the $18.50 area, a location on the chart where the shares may encounter support near the 200-day moving average (MA) and several peaks and troughs from September 2023 to August this year.
A failure to hold above this level could see the shares fall to $15.25, where investors may seek entry points near a trendline linking a period of narrow consolidation on the chart between January and March.
Further selling could drive a decline to $13.25, about 43% below Tuesday’s close, an area where the stock would likely attract buying interest near a range of comparable lows on the chart from October to March.
Meme-Fueled Bullish Target
Amid the possibility for a meme-fueled rally in GameStop shares, it’s worth keeping an eye on the $30.50 area, where an army of retail traders who have bought at lower prices may be happy to book profits near the May 13 gap close and a series of similar trading levels in mid June.
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