GameStop jumps after swinging to profit, ignites rally in meme stocks

(Reuters) – Meme stock GameStop Corp (NYSE:) jumped nearly 40% in premarket trading on Wednesday after the video game retailer posted its first profitable quarter in two years, igniting a surge in other stocks popular among retail traders.

GameStop posted an adjusted profit of 16 cents per share for the fourth quarter, compared to a loss of 47 cents a year ago, helped by a tight lid on costs including job cuts.

The Grapevine, Texas-based company, in which billionaire investor Ryan Cohen serves as chairman and majority shareholder, recorded a 16% decline in costs during the quarter.

GameStop was the most-touted stock on investor-focused social media site stocktwits.com.

“The early signs on costs are encouraging, and expect profitability again in Q4 2023, but want to see the leverage in the non-holiday quarters before modeling full-year positive EBITDA,” said Jefferies analyst Andrew Uerkwitz.

“Revenue headwinds in the core business remain.”

Fourth-quarter revenue fell 1.2% to $2.23 billion.

Other popular stocks among retail traders also rose, with AMC Entertainment (NYSE:) Holdings Inc gaining 10%, while Bed Bath & Beyond (NASDAQ:) added 11%.

The high interest rate regime of the past year has roiled stock markets, with speculative areas of the market such as meme stocks taking a severe blow. GameStop shares slid 25% in the past 12 months, compared to a 10.3% slide in the .