GameStop earnings can’t keep a meme stock down
Updated
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.
GameStopInventory 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.”
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.
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