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GameStop Corp. announced last week that it will report third-quarter results after market close on Dec. 6, sparking a “meme”-like rally in the videogame retailer’s stock this week.
Shares of the original meme-stock darling surged this week, enjoying their best two-day gain in eight months before pulling back Thursday.
GameStop
GME,
was also a top trending symbol on Stocktwits, a social platform for investors and traders, at Wednesday’s close.
Related: GameStop stock’s massive rally driven by fresh wave of speculative bets
“$GME up 10% today on no real news,” tweeted Stocktwits Tuesday. “Is risk back on in markets?”
The stock is up 5.8% Friday, after ending Thursday’s session down 10.5%.
GameStop, like fellow meme-stock darling AMC Entertainment Holdings Inc.
AMC,
was a major beneficiary of the meme-stock buying frenzy in January 2021. Boosted by the WallStreetBets crowd on Reddit, the struggling video game retailer’s shares soared, rising more than 1,200% between January and March 2021 as the company’s market cap surpassed $17 billion. But shares have pulled back significantly since then, and GameStop’s market cap is now $4.4 billion.
Related: GameStop stock jumps after results top estimates, helped by international gains
GameStop beat expectations when it reported second-quarter results in early September, boosted by international sales and what the company described as “a significant software release.”
But in a note released following those results, Wedbush analyst Michael Pachter said GameStop faces a number of obstacles to return to growth. These include a continuing mix shift of game sales from physical to digital, declining hardware sales, far fewer big console game releases going forward and a noticeable shift to PC games, most of which are delivered digitally. The analyst also highlighted growth of gaming subscription services as an obstacle. Set against this backdrop, Wedbush lowered its GameStop price target to $6 from $6.20.
The company has also seen major leadership changes this year. Activist investor Ryan Cohen was named CEO of GameStop in late September, marking the latest chapter in his attempt to breathe new life into the company. GameStop fired its then-CEO Matthew Furlong in June and said that its board had elected Cohen as its executive chairman.
Related: GameStop’s stock soars after activist investor Ryan Cohen named CEO
Cohen, the co-founder and former CEO of Chewy Inc.
CHWY,
made his first investment in GameStop in August 2020 via his investment firm RC Ventures. News of Cohen’s 9% stake in the gaming retailer sent the stock surging at the time. The activist investor quickly began pushing for an overhaul of GameStop, with a focus on digital sales, and he joined the company’s board in January 2021.
While Cohen’s supporters and fans of GameStop took to social media to celebrate his appointment at CEO, Wedbush analyst Pachter was much less effusive. “It means business as usual, which is to say a slow bleed of cash with no clear alternatives to reverse the continuing decline in physical game sales and store traffic,” he told MarketWatch in late September.
Here are the key numbers to look for ahead of the Dec. 6 report.
Earnings: The FactSet consensus calls for an adjusted loss of 8 cents a share, after a loss of 31 cents a share in the year-earlier period.
Revenue: Analysts tracked by FactSet expect the videogame retailer to report fiscal third-quarter revenue of $1.182 billion, down slightly from $1.186 billion in the same period last year.
Stock movement: Last quarter GameStock’s stock rose 0.8% the day following its results. GameStop’s shares have fallen 17.9% in 2023, compared with the S&P 500 index’s
SPX
gain of 18.8%.
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