GameStop earningsAll eyes are on video game retailer GameStop after its meteoric Reddit-led rally earlier this year, but although the e-commerce sales are up 175% in the last quarter alone, the company misses estimates for Q1 and announces a potential share sale instead, which sends prices tumbling to end the following day over 33% down.
On March 23 GameStop posted earnings of $1.34 per share on revenue of $2.12 billion, vs estimates of earnings per share of $1.35 and revenue of $2.21 billion. Its fiscal fourth quarter usually makes up most of its yearly earnings as it gets a boost from holiday sales, but this year investors were left scratching their heads when management abruptly ended the earnings call after only 20 minutes, with no new announcements, and no questions allowed. Stock opened at $197.50 on March 23, but closed way down at $120.34 the following day.
It’s been a pretty crazy year, no doubt. The company kicks off Q2 with a market cap of almost $14 billion, 10 times its market value at the end of 2019, driven by an army of amateur traders armed with nothing but a Reddit account and a chip on their shoulder. The firm saw its share price absolutely explode in January, doubling on a daily basis to rise from $19 to a whopping $483 by the end of the month in an epic short squeeze that shocked Wall Street and turned the markets upside down, burning a bunch of short sellers badly and making some other people very, very rich. Power to the people.
In addition to its lackluster earnings report, GameStop named former Amazon and Google executive Jenna Owens as its new COO (and invited any e-commerce talent out there to apply for its exec team), as well as announcing a potential equity sale. It continues to suspend guidance, but has updated its production and operations so as to speed up its delivery and services; while CEO George Sherman revealed that February store sales rose 23%, thanks to strong hardware sales around the world.
As we look ahead, we are excited by the opportunities that are in front of us as we begin prioritizing long-term digital and E-Commerce initiatives while continuing to execute on our core business during this emerging console cycle,
But can GameStop’s new leaders maintain the company’s boom, or will the firework finally peter out?