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GameStop fails to meet revenue estimates, shares seesaw
GameStop has failed to capitalise on the frenzy around the stock, missing its Q4 estimates, although it reported strong sales in early Q1.
GameStop fails to meet revenue estimates, shares seesaw
GameStop has failed to capitalise on the frenzy around the stock, missing its Q4 estimates, although it reported strong sales in early Q1.
The video game retailer at the centre of this year’s Reddit-driven fight with Wall Street has delivered a profitable fourth quarter mainly due to growth of 175 per cent in e-commerce sales, while in-store sales increased by 9 per cent.
With the traditional brick-and-mortar retailer focusing on online sales during the pandemic, net sales from online retail now stand at one-third of total net sales.
However, revenue was down by 3.3 per cent to US$2.1 billion over the quarter, with both the earnings and revenue failing to reach market expectations.
The company reported net income of US$80.5 million, or US$1.19 per share, for the three months ended 30 January.
George Sherman, GameStop’s chief executive officer, said the organisation managed to adapt to the challenges of the COVID-19 pandemic.
“We are off to a strong start in 2021 as February comparable store sales increased 23 per cent, led by continued strength in global hardware sales.
“Our emphasis in 2021 will be on improving our e-commerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalogue,” Mr Sherman noted.
Following the company’s announcement, its shares seesawed after initially rallying. The company was briefly in positive territory before dropping.
Like many other companies in the United States, GameStop is continuing to suspend earnings forecasts due to the COVID-19 pandemic.
GameStop’s unlikely rise came after becoming the centre of the WallStreetBets saga.
In the weeks since the Wall Street trading frenzy began, the company has seen incredible volatility trading between US$40 to US$350 a stock.
But WallStreetBets members continued to show faith in the retailer, with ‘diamond hands, apes and moon emojis’ of investors saying they will buy the stock regardless of the result.
“Alright Apes, I just bought the dip!” a WallStreetBets member said after the result was announced.
“If GME drops anywhere near $40 again, I’m robbing a fuckin bank so I can buy way more of that dip,” another stated.
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