No stock goes up forever, and for GameStop (GME -5.84%) investors, that "to the moon" mindset seems to come under attack by a meteor shower one day every quarter. The leading video game retailer has fallen sharply the day after it posts fresh financial results in 9 of the past 10 quarters

It's not pretty, and it's not even close. The stock has averaged a decline of 14.2% the day after reporting earnings over the last 10 reports. Past underperformance is no indication of future results, but it's worth pointing out that GameStop will step up on the quarterly stage again shortly after Wednesday's market close. History hasn't been kind to those holding the stock on Thursday. 

Two people getting excited about a software title at a video game store.

Image source: Getty Images.

History repeats itself 

GameStop has been one of the market's biggest winners since the end of 2019. The stock is a 46-bagger since the start of 2020 through Monday's close. It's been a wealth-altering beast of an investment, but despite the buoyant stock chart, it seems to nearly always be vulnerable whenever the chain of small-box video gaming store steps up every three months to talk about its actual business.

Here's the surprisingly grim tally for the monster stock the first trading day after it reports fresh financial results. It's not pretty, with GameStop reporting its fiscal first quarter shortly after Wednesday's market close.

  • Nov. 29, 2018: down 6.7% the next day
  • April 2, 2019: down 4.7%
  • June 4, 2019: down 35.6%
  • Sept. 10, 2019: down 9.8%
  • Dec. 10, 2019: down 15.1%
  • March 26, 2020: down 4.3%
  • June 9, 2020: up 2.2%
  • Sept. 9, 2020: down 15.2%
  • Dec. 8, 2020: down 19.4%
  • March 23, 2021: down 33.7%

Outside of a single report a year ago when the shares managed to squeeze out a modest 2.2% gain in its first pandemic-saddled quarter, it's been all downhill for its shareholders. Bulls will argue that the single days don't matter. It's a blip for a 46-bagger since the beginning of last year.

However, even in that huge run -- where the shares more than tripled last year before exploding skyward in 2021 as the lead horse among meme stocks -- the stock has averaged a better than 14% decline in the day following the five earnings reports that have happened in that time span. It's more than a little troubling that the worst performance over the past year was the last time it reported, when it lost more a third of its value.

Naturally it could be different this time. There's a bullish argument to be made that the brand's enhanced exposure since late January might have inspired an uptick in business activity beyond what would've happened organically for GameStop. With millions of new fans and shareholders, it's something that you can't underestimate.

One can also argue that the comparisons will be easy this time around, as sales plummeted 34% in the prior year's fiscal first quarter with the stores temporarily closing during the initial pandemic shutdown. But that particular point is flimsy since the market knows all about that. Wall Street pros see GameStop's loss shrinking by half on a 9% increase in net sales, but that's off of depressed results last time out. Compare what analysts are modeling in this week's report to where it was during the same fiscal period two years ago and you're looking at a 25% drop in net sales. GameStop was also profitable in the fiscal first quarter of 2019.

The business is smaller now. It has permanently closed some of its stores. E-commerce has helped offset some (but not all) of the brick-and mortar shortfall. Short interest has also plummeted since earlier this year with naysayers learning their lesson the hard way in the short squeeze.

It wouldn't be a surprise to see GameStop deliver better-than-expected top-line results this week. The refreshed cult following could find more people turning to GameStop for their physical-product gaming needs, and the beat might be strong enough to trickle all the way down to a bottom line with less red ink than analysts are forecasting.

The rub here -- as it has been through the rally over the past few quarters -- is that when the stock gains outpace the fundamentals, the shares are vulnerable during earnings season. GameStop remains one of the more dynamic retail stocks, but also one of the riskiest investments when it's time to talk numbers. We'll find out soon if it can break out of that rut on Thursday.