• GameStop will sell up to 45 million common shares in an at-the-market offering.
• The video game retailer reported preliminary results that showed a drop in first-quarter sales.
• The news comes after GameStop's stock surged earlier this week in a brief revival of the meme stock trade triggered by posts on X from “Roaring Kitty.”

GameStop shares tumbled 19.7% Friday after the video game retailer said it plans to sell additional shares and reported preliminary results that showed a drop in first-quarter sales.

In a new regulatory filing, the video game retailer said it will sell up to 45 million class A common shares in an at-the-market offering. The sale comes after GameStop shares surged earlier this week in a brief revival of the meme stock trade.

Meanwhile, in a separate statement, GameStop said it now expects net first-quarter sales in the range of $872 million to $892 million, down from around $1.24 billion in the same quarter last year. Two analysts polled by FactSet said they expected a first-quarter revenue of around $1 billion.

GameStop's first-quarter net loss is expected to be between $27 million and $37 million, narrower than a net loss of $50.5 million in the year-earlier period. The brick-and-mortar company has been grappling with competition from e-commerce-based competitors. In late March, GameStop announced an unspecified number of job cuts to reduce costs.

The rally in GameStop this week appeared to be partially fueled by posts on X from the long-dormant account of "Roaring Kitty," also known as Keith Gill, one of the key figures in the 2021 meme stock mania. GameStop hit a high of $64.83 per share on Tuesday, up more than 200% from close on May 10.

The rally fizzled out later in the week, with GameStop dropping sharply on Wednesday and Thursday. Shares closed Thursday at just $27.67, down more than 50% from the highs of the week. Net retail trader inflows have been much smaller than the amount seen during the trading frenzy three years ago.

GameStop ended the rollercoaster week up 27%.

Michael Pachter, a Wedbush analyst covering GameStop, said GameStop is not in a position to be profitable.

"They made $6 million last year and burned cash," Pachter said. "We expect them to lose $100 million a year going forward. It's a race to see if they can close stores fast enough to limit losses, but they have no plan that would suggest they can grow revenues or profits, and their core business is in decline."

Pachter has an underperform rating on GameStop and a $7 price target. 

— CNBC's Jesse Pound contributed reporting.