Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

GameStop shares drop as executives mum on turnaround plan details

Stock MarketsSep 09, 2021 01:11PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: GameStop logo is seen in front of displayed Reddit logo in this illustration taken on Febr. 2, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

(In paragraph 11 of Sept. 8 story, corrects to show stock closed at $198.80, not $199.16, and YTD gain was 955%, not 1,052.46%)

By Svea Herbst-Bayliss and Akanksha Rana

BOSTON (Reuters) -GameStop Corp, at the center of this year's "meme stock" trading frenzy, on Wednesday reported a 25% jump in quarterly sales but failed to lay out fresh details about how it plans to refashion itself into a gaming and entertainment retailer.

Fresh from raising new capital and watching its share price march higher during the second quarter, GameStop (NYSE:GME) executives reported that net sales, the company's main performance metric, jumped to $1.18 billion in the three months ended July 31 from $942 million a year earlier as vaccinations encouraged people to return to its stores.

Analysts had estimated sales of $1.12 billion, according to IBES data from Refinitiv.

Despite the stronger numbers, investors reacted by pushing the shares down 7.7% in after-hours trading, complaining on the internet that the company was still not taking questions and was declining to tip its hand about future plans.

Wednesday marked the first time that GameStop's new chief executive, Matt Furlong, spoke to investors. Furlong, who joined in June, promised that the company's mission was still to "delight customers" and deliver value to long-term shareholders.

While the company has excited many retail investors with the prospects of building the leader in the video game business, which has higher revenue than the Hollywood movie industry, Furlong's post-results conference call lasted less than 10 minutes and did not allow for questions.

He also provided no financial forecasts.

Early this year, retail investors hyped stocks including GameStop on news site Reddit and brokerage site Robinhood (NASDAQ:HOOD), a blow to several established hedge funds that bet the stocks would tumble and creating such a frenzy of fortunes made and lost that the U.S. Congress held hearings to investigate https://www.reuters.com/business/retail-consumer/hedge-funds-robinhood-face-grilling-by-congress-over-gamestop-reddit-rally-2021-02-18.

SHORT CALL, SHORT ON DETAILS

The quarterly results come as investors closely track chairman and top shareholder Ryan Cohen's efforts to reinvent the company by focusing more on e-commerce while also trying to rejuvenate the physical stores after a year of pandemic-related closures.

Whether Cohen, along with his new management team, will succeed is still unclear and there were no new hints on Wednesday only weeks after Cohen said in June, "You won’t find us talking a big game, making a bunch of lofty promises, or telegraphing our strategy to the competition."

The company's shares fell nearly $15 or 7.4% in after-hours trading after closing the regular session at $198.80, marking a 955% increase so far this year.

Over half of the approximately $110 million worth of GameStop shares traded after hours on Wednesday came after the company's conference call. Some commenters on Reddit's wallstreetbets trading forum complained that the call was short and lacked specifics about GameStop's turnaround strategy.

GameStop reported a net loss of $61.6 million compared with a loss of $111.3 million in the year-ago quarter. The company also reported $378.9 million in expenses, up from $348.2 in the year ago quarter. "Revenues were just slightly higher than expected and operating expenses were meaningfully higher, so losses were wider than we expected," Wedbush analyst Michael Pachter wrote.

At the annual meeting in June, Cohen emphasized the company's focus on "long-term growth" as it takes on both big-box retailers and works to revive its own network of stores.

Cohen, the billionaire co-founder and former chief executive of online pet supplies retailer Chewy (NYSE:CHWY) Inc, has hired several Amazon.com Inc (NASDAQ:AMZN) veterans and raised funds for his turnaround efforts through a share sale while focusing on improving the stores' business by adding higher-margin products and better inventory.

This is GameStop's second straight quarterly revenue beat after having missed estimates for more than two years as the company struggled with gamers shunning physical discs to download and play online, a trend that accelerated during the pandemic.

Adjusted loss per share was 76 cents, compared with a loss of $1.42 a year ago but analysts had expected a 67-cent loss, according to Refinitiv IBES data based on the work of four analysts.

The company ended the quarter with $1.78 billion in cash and with no long-term debt other than a $47.5 million low-interest loan associated with the French government's pandemic response.

GameStop shares drop as executives mum on turnaround plan details
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (5)
John Conner
John Conner Sep 09, 2021 5:39PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I don't think these people know what green means.
Don Gamestop
Game_Over_Hedgie Sep 09, 2021 1:40PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What drop??? Hahaha💎👐❤️🐒
Mr Stanley
MStanley Sep 09, 2021 1:22PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Reuters, not again! you are better than that. check at least volume on which price dropped ATH. blaming retails again? shame, shame...
GME Forever
GME Forever Sep 09, 2021 7:48AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Investors pushing price down afterhours? ... Probably author of this article has no knowledge on stocks, trading and reading charts.. that's all what people with brain can conclude from this article
HD HD
HD HD Sep 08, 2021 7:46PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
buy the dip !
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email