Text size
GameStop will have to report quarterly earnings on Wednesday.
Michael M. Santiago / Getty Images
After a relatively quiet couple of months,
GameStop
actions are once again the protagonists. The meme sensation turned into a video game retailer will report on the July quarter results after the market closes on Wednesday.
The consensus among the four analysts who still cover stocks and provide estimates to FactSet is that the company (ticker: GME) will report a tight second-quarter net tax loss of 67 cents a share. They expect sales of about $ 1.232 billion, up from $ 1.282 billion in the first quarter, but an improvement from $ 942 million in the second quarter of last year.
For the Wednesday evening report, options markets involve a 9% to 12% move, up or down, after gains. If the last two reports are indicative, expect volatility.
More important for investors will be updates to the company’s new management team. Chewy activist and co-founder Ryan Cohen joined the GameStop board in January – which kicked off the initial upsurge in stocks – and became chairman of the board in June. CEO Matt Furlong and Chief Financial Officer Mike Recupero both
Amazon.com
alumni: They started working on GameStop on June 21 and July 12, respectively, so this will be the first earnings report for the two executives.
By hiring a group of executives with substantial e-commerce experience and investing in the realization, the company has signaled progress in efforts to renew GameStop’s digital presence and customer service efforts. Still, Wedbush analyst Michael Pachter said De Barron the company has not contributed any substance to its strategic ambitions.
“They want to be like Amazon,” Pachter added. “I hope they keep the mystery alive.”
In June, Cohen said he would not make high promises or telegraph his strategy to competitors. Still, he listed goals such as “delighting customers and generating long-term shareholder value.” A substantial upgrade, or significant progress in your investment efforts, could provide a spark for stocks.
Still, David Trainer, CEO of investment research firm New Constructs, argues that stocks are traded at the time of the memes, rather than the fundamentals. He thinks the stock price would approach $ 30 if it were quoted based on the fundamentals of the business.
“The business results involved in GameStop’s current stock price are far beyond what any reasonable person could expect the company to achieve,” Trainer says. “Even if GameStop’s management transforms the business into a much larger, more profitable company, it’s likely that stocks won’t increase because that business momentum already comes at a price.”
With GameStop shares falling 1.9% to $ 199 on Tuesday, shares still rose 2,500% last year and 956% to date. Shares fell 34% from closing on June 7th. While it’s hard to describe what moves GameStop stocks on a given day, short seller activity, volume options, impulse trading, and online conversation are some of the non-key factors to keep in mind. account.
Ihor Dusaniwsky, managing director of short-term sales analysis provider S3 Partners, estimates that GameStop’s short-term interest is $ 1.44 billion. Its estimate at 6.94 million shares in short circuit represents approximately 11% of the shares available for trading.
“Over the past week we saw significant short coverage,” Dusaniwsky says, noting that short-term shares declined by about $ 306,000, worth $ 62 million, even though the share price fell.
Write to Connor Smith at [email protected]