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Investors are finally taking a look at GameStop’s fundamentals after a trading frenzy fueled by Reddit earlier this year.
Here’s what the company did after Tuesday’s bell.
- He released quarterly results that lost Wall Street estimates.
- In its most recent executive move, the company named former Amazon and Google executive Jenna Owens as its new chief operating officer.
- And in an indication of the transformation that made some investors excited about the stock, the company said global e-commerce sales increased 175% in the last quarter and accounted for more than a third of its sales in the period.
- GameStop also recognized in a document that it was considering selling additional shares.
Shares were initially traded higher after the bell, but the latest drop was around 7%, with traders likely to react to news of the potential sale of shares, an action that many investors and analysts thought would be prudent, given the high driven by Reddit in stocks.
“Since January 2021, we are evaluating whether we should increase the size of the ATM Program (in the market) and whether we should potentially sell shares of our Class A Common Shares under the increased ATM Program during the fiscal course of 2021, primarily to finance the acceleration of our future transformation initiatives and general working capital needs, “said a company document. “The timing and amount of sales in the ATM Program would depend, among other factors, on our capital needs and alternative sources and capital costs available to us, market perceptions about us and the current trading price of our Class Common Shares THE . “
In the period ended in January 2021, GameStop earned $ 1.34 per share and revenue of $ 2.12 billion. Wall Street expected GameStop to post $ 1.35 earnings per share on $ 2.21 billion in revenue, according to the Refinitiv average of the six analysts covering GameStop.
This marks GameStop’s first quarterly adjusted profit since the fourth quarter of 2020. GameStop’s fourth quarter earnings typically represent the bulk of the company’s annual earnings, driven by holiday sales. GameStop same store sales increased 6.5%.
“We started off well in 2021, with comparable store sales in February rising 23%, driven by continued strength in global hardware sales. Looking ahead, we are excited about the opportunities ahead of us as we begin to prioritize the long-term – end digital and e-commerce initiatives as we continue to run our core business during this emerging console cycle, “said GameStop CEO George Sherman in the earnings release.
Tuesday’s earnings mark GameStop’s first quarterly report since GameStop’s trading craze in January.
In January, an epic tightening of GameStop’s stock shocked Wall Street and drew attention to an emerging class of retail investors on social media platforms like Reddit. GameStop’s stock price skyrocketed to $ 483 per share and subsequently lost 90% of its value. The controversy caught the attention of Wall Street and Washington.
Since the rise and fall of GameStop in January, stocks have continued to rise, with an appreciation of almost 70% this month. GameStop’s shares increased more than 860% in 2021.
GameStop has a market capitalization of almost $ 14 billion, more than 10 times the $ 1.3 billion market capitalization that the shares had at the end of last year. A year ago, GameStop’s market capitalization was $ 245 million.
GameStop’s shares have traded positively on new developments for the company in the past five months, such as the appointment of Chewy co-founder Ryan Cohen on the GameStop board and the focus on GameStop technology and the transition from e-commerce.
Earlier this month, GameStop announced that it has hired Cohen to lead its move to e-commerce. Cohen is serving as chairman of a special committee formed by the GameStop board to assist in his transformation. Board members Alan Attal, a former chief operating officer at Chewy, and Kurt Wolf, chief investment officer at Hestia Capital Management, also serve on the committee.
The committee has already appointed a chief technology officer, has hired two executives to lead customer service and e-commerce service, and has started looking for a new chief financial officer with experience in technology or e-commerce. GameStop previously announced that current CFO Jim Bell will step down on March 26. Citing sources familiar with the matter, Business Insider reported that Bell was removed by Cohen.
GameStop said on Tuesday that its client director, Frank Hamlin, will step down.
The company said it continues to suspend the guidelines.