GameStop Revenue rose 25% in the first quarter of fiscal year as the video game retailer embarks on a turnaround strategy, partly fueled by a Reddit-inspired stock rally. The company also named former Amazon Managing Director Matt Furlong as the new CEO.
Shares fell more than 12% in expanded trading on Wednesday after the company turned down an outlook for the year and announced it would sell up to 5 million shares.
Compared to the consensus estimates by Refinitiv, the company performed as follows in the first fiscal quarter ended May 1:
- Loss per share: 45 cents per share adjusted vs. 84 cents expected
- Revenue: $ 1.28 billion versus an expected $ 1.16 billion
In the quarter, GameStop reported that its net loss decreased from $ 165.7 million, or $ 2.57 per share last year, to $ 66.8 million, or $ 1.01 per share. Without items, the company had a loss of 45 cents per share. According to Refinitiv, analysts expected a loss of 84 cents per share of GameStop.
Total revenue rose to $ 1.28 billion from $ 1.02 billion last year, beating Wall Street’s expectations of $ 1.16 billion.
The company rejected an annual forecast. The sales momentum continued in the second quarter, with total sales in May increasing by around 27% compared to the same month last year.
GameStop filed a prospectus with the Securities and Exchange Commission to “market” up to 5 million shares of its shares from time to time. The funds it raises through these stock sales will be used for general corporate purposes to invest in growth initiatives and strengthen its balance sheet, the company said.
GameStop announced on May that it had paid off its long-term debt and was no longer borrowing from its asset-based revolving credit facility.
The video game retailer’s stock has fluctuated significantly over the past few months as retailers have shared tips on Reddit and tried to short squeeze businesses like AMC entertainment, Bed bath in addition and Clover health – collectively The group has come to be known as Meme Stocks.
GameStop’s shares are up 1,506% so far this year. Shares rose from a 52-week low of $ 3.77 to a 52-week high of $ 483. At the close of trading on Wednesday, its shares were trading at $ 302.56. Its market value is $ 21.41 billion.
The commercial frenzy has caught the SEC’s attention. In a filing on Wednesday, GameStop announced it received a request from the SEC on May 26 to voluntarily provide documents and information. The company said it is reviewing the request and planning to work with it.
GameStop has tried other ways to get investor attention as it is more focused on e-commerce and attracting talent from other companies. There was a draft this spring Tough Co-founder Ryan Cohen Efforts to guide online business growth. He was named chairman at a shareholders’ meeting on Wednesday. The company also hired several former Amazon Senior executives including Jenna Owens, their new chief operating officer; Matt Francis, its first chief technology officer; and Elliott Wilke, their chief growth officer.
However, some analysts are not convinced that this longtime brick-and-mortar retailer can turn its business and believe the company has been backed by speculation.
Loop Capital analyst Anthony Chukumba stopped reporting on GameStop earlier this year after the Reddit frenzy. He told CNBC that the video game retailer’s challenges are profound, regardless of who he hires.
“It’s great that these people have worked at Amazon. Amazon is a very successful retailer that I am describing, that I am very familiar with, but ultimately GameStop’s problems have very little, if any, with e with -Commerce” said Chukumba on CNBCs “Closing bell. ”
“Their problem is not that they are not a good omnichannel retailer. The problem is that gamers are increasingly downloading video games,” he added. “Look, you can hire Jeff Bezos when he comes back from space. … It won’t make a difference. The symptoms do not match the medicine the doctor is giving them. You can hire anyone you want on Amazon – don’t go. “Make a Difference.”
—CNBCs Kevin Stankiewicz contributed to this story.
Correction: GameStop has appointed former Amazon manager Matt Furlong as its new CEO. An earlier version of this story misrepresented his first name.