Your capital is at risk when you invest. Never risk more than you can afford to lose. Financial products are complex instruments and come with a high risk of losing money.

GameStop Flat After Reporting Mixed Quarter

June 2nd, 2022 -

About 3 Mins
Dotted Circle
Dotted Circle Alt2x

Ticker Symbol: GME

The meme stock king GameStop’s shares are trading flat in the morning trading session after reporting high cash burn but strong sales growth in its first quarter earnings call for fiscal 2022.

The company, which has traditionally functioned as a video game retailer with almost 5,000 stores across the globe, has been undergoing a major shift in its strategic vision in recent years. New management has been transitioning the retailer away from the business of physical sales of games and towards crypto currencies and non-fungible tokens (NFTs).

The company reported an adjusted loss per share of $2.08 against an analyst estimated loss per share of $1.16, and the year ago loss of 45¢. Sales, however, grew 8% year over year to $1.38 billion, handily beating the expected $1.33 billion from Wall Street.

Hardware and accessories net sales were down 4.2% from the year ago period to $673.8 million, but software sales were up 22% to $483.7 million and collectibles sales surged 26% to $220.9 million.

The company primarily blamed higher freight costs and increased inventory for the miss on earnings, saying that gross margins shrank by 4.2% over the year ago period. The company also reported a negative cash flow of $236 million for the quarter.

Ryan Cohen, founder of the e-commerce pet food delivery company Chewy, who became Chairman of the board in 2021, has tried to push the retailer to pivot towards the burgeoning crypto field. The company launched a digital asset wallet in May and started selling IMX, an Ethereum token for the trading of NFTs, in February.

The company recorded $76.9 million in revenue from the sale of digital assets during the quarter. Furthermore, management plans to launch a new NFT marketplace during its fiscal second quarter, deepening its presence in the space.

The company has outlined plans to become an online marketplace for videogames and related products hoping they become a “super app” for gaming. GameStop plans to differentiate itself from other NFT trading hubs such as Coinbase, by catering its needs to gamers specifically.

Management has outlined plans to dominate the ecosystem where gamers can buy games, trade gaming related NFTs and other crypto assets all from one place. Currently, GameStop primarily sells games for console manufacturers such as Xbox, PlayStation, and Nintendo, instead of PC-native games. The firm would have to manage a transition towards PC gaming while simultaneously launching the crypto ecosystem to meet its value proposition.

This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.

This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.
Share

Read more latest market news

Sharpen your trading and investing skills with our regular deep dives into global financial markets, trends, insights and strategies.

Palantir Has Potential Said One Analyst

Palantir Technologies, a prominent data-analytics firm primarily serving the U.S. government, has significant growth potential according to Wedbush analysts led...

July 18th, 2024 -

About 2 Mins

Nvidia Stock Recovers. All Eyes on Big Tech This Week

Nvidia’s stock saw a positive uptick on Monday after experiencing a sharp decline last week. The company, known for its...

April 22nd, 2024 -

About 2 Mins

Nvidia is Edging Closer to Apple And The Run Isn’t Over Yet

Nvidia’s stock has been on the rise, marking a sixth consecutive day of gains. The company has surpassed Saudi Aramco...

March 7th, 2024 -

About 2 Mins

Sign up for a free demo

Select a platform

Sign up for a free demo

Please confirm that you are over 18 years old to continue

Temporary Slide Menu