- Wednesday, October 16, 2024
GameStop Corp. announced that it will report its third-quarter results on December 6 after the market closes. This news has sparked a rally in the stock of the videogame retailer, reminiscent of the "meme" frenzy seen earlier this year.
Shares of GameStop, the original meme-stock darling, have experienced their best two-day gain in eight months, although they pulled back slightly on Thursday. The stock has also been trending on Stocktwits, a social platform for investors and traders.
On Tuesday, Stocktwits tweeted, "$GME up 10% today on no real news. Is risk back on in markets?" This suggests that the stock's recent surge might be driven by speculative bets.
While GameStop's stock ended Thursday's session down 10.5%, it has rebounded slightly and is up 5.8% on Friday.
Similar to AMC Entertainment Holdings Inc., another meme-stock favorite, GameStop enjoyed a significant surge in January 2021 due to the buying frenzy instigated by the WallStreetBets community on Reddit. However, the stock has since pulled back, and the company's market cap now stands at $4.4 billion, significantly lower than its peak of over $17 billion.
In early September, GameStop reported better-than-expected second-quarter results, attributing its success to strong international sales and a notable software release. However, Wedbush analyst Michael Pachter highlighted several challenges the company faces moving forward, such as the shift from physical to digital game sales, declining hardware sales, fewer major console game releases, and the growing popularity of gaming subscription services.
Considering these obstacles, Wedbush has lowered its GameStop price target from $6.20 to $6.
Despite the challenges, GameStop's upcoming third-quarter results will undoubtedly be a focal point for investors and traders alike, as they seek to better understand the company's current standing and future prospects.
GameStop Sees Leadership Changes
GameStop, a prominent gaming retailer, has undergone significant leadership changes this year. In late September, activist investor Ryan Cohen was appointed as the company's CEO, signaling a new chapter in his efforts to revitalize GameStop. Prior to this, former CEO Matthew Furlong was terminated in June, and Cohen was elected as the executive chairman by the board.
Cohen's Influence on GameStop
Ryan Cohen, the co-founder and former CEO of Chewy Inc., made his initial investment in GameStop through his investment firm RC Ventures in August 2020. This acquisition, which amounted to a 9% stake in the company, caused GameStop's stock value to soar. With his position secured, Cohen wasted no time advocating for a reformation of GameStop, particularly focusing on digital sales. In January 2021, he officially joined the company's board.
Differing Opinions on Cohen's Appointment
While supporters of Cohen and fans of GameStop celebrated his appointment as CEO on social media, not everyone shared the same enthusiasm. Wedbush analyst Pachter expressed a more skeptical view, stating that he believed it would be "business as usual" for GameStop. Pachter emphasized the urgent need for a reversal of the decline in physical game sales and store foot traffic.
Key Numbers to Watch
As GameStop prepares to release its quarterly report on December 6th, several key figures will be closely observed:
Earnings: Analysts estimate an adjusted loss of 8 cents per share for the quarter, compared to a loss of 31 cents per share in the same period last year.
Revenue: The FactSet consensus suggests that GameStop's fiscal third-quarter revenue will reach $1.182 billion, slightly lower than the $1.186 billion reported in the previous year.
Stock Performance: Following the previous quarter's results, GameStop's stock experienced a modest 0.8% increase. Throughout 2023, GameStop's shares have declined by 17.9%, in contrast to the S&P 500 index's gain of 18.8%.
GameStop's ongoing transformation under new leadership remains a topic of both excitement and skepticism within the gaming and investment communities.
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