The lack of details about GameStop (GME) recovery plan, no guidance for the following year and no question and answer during the conference call left some analysts frustrated and skeptical after the company’s fourth quarter earnings results.
On Wednesday, shares fell about 18% during the morning session, hovering around $ 150.
The company “generally becomes more available after the conference call, to at least give a little more color on what they are thinking and what the trends would be. I didn’t understand any of that. So it has been very frustrating,” Joe Feldman, from Telsey Advisory Group, told Yahoo Finance.
“I think, according to all the stock investors, they were probably very upset because there was not a lot of new information to come out yesterday,” added Feldman.
On Tuesday, the company announced former tech veteran from Amazon and Google, Jenna Owens, who will be the next COO, another c-suite change since Chewy (CHWY) co-founder Ryan Cohen joined. on the board in January.
However, the BofA Global Research team highlights “very few details about a plan were given in the GME 4Q conference call”, with no question and answer session during the 22-minute conference. The company also said it continues to suspend guidance at this time.
“GME has provided little detail about recovery plans and we remain skeptical about efforts to offset the continuing digital pressure,” says the BofA note, “Given the continuation of very challenging results for GME, changes are needed and soon” .
BofA analysts reiterated an underperformance rating with a $ 10 price target.
“We remain very skeptical about GME’s efforts to resolve its long-standing problem of digital disintermediation and the fact that its primary market in new and used physical console games is shrinking at a rapid pace,” says the analyst’s note. .
These are the results for the fourth quarter versus the consensus estimates of Wall Street analysts, according to data from Bloomberg:
Recipe: $ 2.12 billion versus expected $ 2.21 billion
Adjusted earnings: $ 1.34 per share vs $ 1.43 estimate
Comp Sales: + 6.5% vs + 8.1% estimate
Global e-commerce sales (included in comparable store sales) increased by 175% and represented 34% of net sales in the fourth fiscal quarter of 2020 against 12% of net sales in the fourth fiscal quarter of 2019.
“Looking ahead, we are excited about the opportunities ahead of us as we begin to prioritize long-term digital and e-commerce initiatives, while continuing to run our core business during this emerging console cycle,” said the CEO George Sherman.
Before profits, GameStop announced that its customer director, Frank Hamlin, will step down. This marks another major change since activist investor and co-founder of Chewy (CHWY) Ryan Cohen joined the board of directors in January.
A pivot for digital and technology is what the future looks like for the struggling video game seller, with big ads in recent months serving as catalysts for rising stock prices and increasing speculation by retail investors from companies like WallStreetBets do Reddit.
In early February, the company announced that Matt Francis, a former engineering leader at Amazon Web Services, would embark as its first chief technology officer. GameStop also announced that its chief financial officer, Jim Bell, would resign – news that caused stocks to more than double at the time.
Wall Street analysts pointed out that the video game retailer’s shares are being traded separately from the fundamentals. The lawsuit currently has no reviews by buying analysts, 4 arrests and 3 sales, according to Bloomberg data.
GameStop was the target of a massive short squeeze by retail investors in January, when the stock peaked at $ 483 intraday on January 28. hovering around $ 185 / share.
While there was no mention of GameStop’s recent frenzy and shrinking shares during the earnings call, in its filing with the 10K SEC the company said it is considering selling common shares “primarily to finance the acceleration of our future transformation initiatives” .
Ines serves the United States stock market. Follow her on Twitter at @ines_ferre
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