GameStop Reports Earnings Today. It Could Spark Renewed Interest in Meme Stocks.
is set to report first-quarter results after the market closes Wednesday. Shares have bounced back from a steep drop in recent weeks but remain well below the highs seen one year ago.
Shares of the videogame retailer slipped 2.3% to $121.87 in recent Wednesday trading.
stock (ticker: GME) has traded as low as $77.58 and as high as $344.66 in the past 52 weeks.
Wednesday’s results could spark renewed interest in the meme stock, as recent earnings reports have preceded volatile trading for GameStop shares. Such moves came despite uneventful earnings reports and some brief quarterly conference calls with no questions from analysts.
Wedbush analyst Michael Pachter told Barron’s he expects another brief conference call featuring prepared remarks from CEO Matt Furlong.
“Maybe a mention of NFT, Metaverse and crypto wallet; no details on their strategy to actually make money; no explanation of how their deep relationships with console gamers gives them a competitive advantage with blockchain assets (NFTs) offered only in PC games; more promotion of their customer obsession; no progress in turning the retail business around,” Pachter added.
Pachter is among the three analysts still providing FactSet with earnings estimates. The consensus among them calls for a first-quarter adjusted net loss of $1.45 a share and sales of $1.32 billion.
co-founder Ryan Cohen joined the firm as a member of the board of directors in January 2021, shares have traded wildly based on a mix of factors like retail trader enthusiasm, short seller interest, and aggressive options bets. Since Cohen became the board’s chairman last June, the firm has sought to turn around its fortunes by expanding offerings, improving its logistics efforts, and investing in customer care. The company has also added a spate of new hires with e-commerce and technology firm expertise, most notably CEO Matt Furlong who previously oversaw Amazon.com’s (AMZN) Australia business.
The company launched a wallet for cryptocurrencies and nonfungible tokens in May, which it says allows users to store, send, receive, and use crypto and NFTs without leaving their web browsers. The wallet will be used in GameStop’s NFT marketplace, which plans to launch in the current quarter. Experts are skeptical that GameStop’s NFT marketplace can gain traction and have material impact on the firm’s fortunes. The recent cryptocurrency selloff likely hasn’t helped.
None of that may matter for the stock in the near term. S3 Partners Director Matthew Unterman told Barron’s the short-selling analytics firm estimates 14.92 million shares were recently sold short, accounting for 23.5% of shares available for trading. A short position is a bet that a stock will fall, wherein an investor borrows and then sells shares. Short interest is up 77% year to date, according to Unterman. Such a high short interest—a typical
firm has a short interest in the low-single-digits—makes for a crowded trade and leaves room for a potential short squeeze.
The company is also asking shareholders to increase authorized shares to one billion from 300 million at its annual meeting on Thursday. The firm says the increased breathing room would allow it to implement a stock split and provide more flexibility for future corporate needs.
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