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GameStop earnings can’t keep a meme stock down

By Joyanta Acharjee


Updated

Shoppers pass a GameStop store in New York City
GameStop stock was ticking up on the latest quarterly numbers for the retailer – Photo: Shutterstock

GameStop earnings beat market expectations on Thursday as the highly-followed retailer announced further digital expansion plans.

Recent GameStop (GME) earnings reports have led to volatile trading in shares, thanks to the stock’s large retail investor following.

GameStop stock was up more than 4% in morning US trading but accelerated in the afternoon session more than 10% above its Wednesday close. For the year to date, the stock is is down nearly 10%.

GameStop (GME) stock price

Tracing its roots back to a Dallas, Texas software retailer called Babbage’s in 1984, GameStop sells videogames, consumer electronics and accessories.

The GameStop brand also includes international retailer EB Games and digital magazine Game Informer. The company operates retail stores in the US, Canada, New Zealand, Australia and Europe.

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Q1 earnings

For the fiscal first quarter ended 30 April, loss per share widened to $2.08 from $1.01 a year earlier as sales rose 8% to $1.38bn (£1.09bn, €1.29bn).

Analysts had been expecting a loss of $2.49 per share on sales of $1.32bn, according to according to figures widely available on financial news sites.

Videogame retailers like GameStop have struggled with profits as gamers prefer to download and stream their games rather than purchase physical game disks. Store closures due to the pandemic led the company to beef up its e-commerce offering.

Games advertised on the GameStop websiteGameStop

Inventory at the close of the quarter rose to $917.6m from $570.9m a year earlier, GameStop said, reflecting a continued focus on improving in-stock levels in merchandise to meet increased customer demand and offset supply chain headwinds.

“Our growth and the launch of new tech products, such as our digital asset wallet and the upcoming NFT marketplace, demonstrate that we are, in fact, starting to transform,” GameStop CEO Matt Furlong told analysts and investors on a conference call.

“In the quarters and years ahead, we’re going to continue embracing change, putting the customer first, and focusing on long-term stockholder value.”

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Furlong didn’t give out any future earnings guidance on the call.

What’s next?

GameStop said it was proceeding with its plans to enable transactions on its own NFT (non-fungible token) marketplace after launching its own wallet for cryptocurrencies and NFTs last month.

Non-fungible tokens are unique, non-tradeable ownership receipts for digital assets that are tracked on a specific blockchain to prove authenticity. They can take the form of a static image, video clip or an animated 3D image.

Earlier this year GameStop stock soared on entered a partnership with a cryptocurrency developer over non-fungible tokens.

“Immutable X will also become a layer-2 partner and platform for GameStop and the company’s NFT marketplace that is expected to launch later this year,” GameStop said in a press release at the time.

Further details are also expected for a stock split, first announced in March in a regulatory filing.

Trading frenzy

Last year GameStop was the subject of intense social media chatter and trading frenzy.

 

The company has since revamped its leadership roster in order to diversify and regain profitability, naming two former Amazon.com (AMZN) executives as CEO and CFO respectively.

Entrepreneur and activist investor Ryan Cohen also joined the board as chairman. Cohen is the founder of online pet food business Chewy.

Markets in this article

AMZN
Amazon.com Inc (Extended Hours)
191.81 USD
-1.39 -0.720%
GME
GameStop Corp (Extended Hours)
28.30 USD
-1.13 -3.860%
GME
GameStop Corp (Extended Hours)
28.30 USD
-1.13 -3.860%
GME
GameStop Corp (Extended Hours)
28.30 USD
-1.13 -3.860%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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