GameStop (the stock) and GameStop (the retailer) continue to be worlds apart:
The last time GameStop announced its quarterly earnings, in early December, the stock market valued the video game retailer at about $1 billion. Following a worse-than-expected earnings report released Tuesday night, the company now has a market cap of just under $10 billion as of Wednesday morning.
Sure, that's down roughly 18 percent from Tuesday's closing price, and off roughly 44 percent from a January peak that saw the stock offering become a poster child for the retail investor-driven "meme stock" phenomenon. Still there's not much in this week's report to suggest that GameStop as a company is worth ten times as much as it was just three months ago, much less the higher valuations it briefly enjoyed in the interim.
[...] Overall, GameStop's latest earnings report shows a company still struggling to turn itself around. For the full fiscal year, the company lost $215 million on net, improving on a net loss of just over $470 million the year prior. Net sales for the year were down over 21 percent, to $5.09 billion, a decline GameStop blamed in part on its "de-densification efforts" (i.e. closing nearly 700 stores). Even taking that move into account, though, sales for comparable stores were down 9.5 percent for the year.
Previously:
GameStop Shares Rise, Fall and Rise Again in Roller-Coaster Day of Trading
The Complete Moron's Guide to GameStop's Stock Roller Coaster
Console Options Without Disc Drives Could be GameStop's Final Death Knell
GameStop Heading Towards Possible Doom
GameStop Posts Massive Loss as Pre-Owned Game Sales Plummet
Related Stories
GameStop Posts Massive Loss as Pre-Owned Game Sales Plummet:
One of the world's biggest video game retailers just announced its worst annual performance in decades, raising renewed questions about the health of the physical video game market as downloadable games continue their ascent. Net sales for GameStop were down 3 percent for the 52-week period ending February 2, a slide that helped flip last year's modest $34.7 million profit to a sizable $673 million operating loss. On top of that, the company expects sales to decline another 5 to 10 percent in the next fiscal year.
GameStop's massive loss is the largest ever reported by the company, and only the third annual loss since it grew out of the corporate remains of FuncoLand in 2000. GameStop last posted a loss in 2012, when it lost nearly $270 million thanks in part to weak holiday sales near the end of that era's console generation.
But more than the amount, the reason behind the new loss could be cause for long-term concern at the retailer's thousands of worldwide storefronts. While hardware sales were roughly flat and new software sales fell about 4 percent year over year, pre-owned software sales cratered nearly 12 percent for the year, continuing a years-long slide.
GameStop has always relied on the high margins of buying low and selling high on used game discs to buoy an otherwise low-margin business. But the rise of downloadable games, which can't be resold, has taken the wind out of those sails to a large extent. "We continue to see declines in pre-owned software, reflecting the decline in sales of new physical games and the increasing demand for digitally offered products," GameStop COO & CFO Robert Lloyd said in an earnings call.
I'm curious how many Soylentils still prefer to buy their games on physical media and who prefers a digital distribution. What's your motivation? Also, what if anything, can Game Stop do so as to continue as a going concern?
GameStop's future is grim as its stock price crumbles
GameStop is falling, and many analysts and industry observers are skeptical it can recover. The retailer reported earnings yesterday for Q1 of its fiscal 2020 yesterday where it missed its revenue target. Now, the company's stock price has crumbled to $5, which is the lowest this has been since 2013.
For Q1, GameStop generated $1.55 billion in revenues. That was significantly short of Wall Street's expected $1.64 billion. The company did cut costs to improve its earnings per share, but that's not something it can do every quarter. And GameStop's outlook is dire in part because its core business — selling hardware and used games — is starting to dry up.
Used game revenues dropped 20% year-over-year last quarter. And hardware revenues dropped 35 percent in the same comparison. And while the company has diversified into collectibles with its ThinkGeek brand, that growth wasn't enough to offset other declines.
[...] "Pre-owned revenues declined 20% year-on-year in Q1 2019, driven by continued traffic headwinds from a tougher year-on-year software release slate," Baird analyst Colin Sebastian wrote in a note to investors. "While new hardware sales declined 35% year-on-year, as Switch growth was more than offset by declines in Xbox One and PlayStation 4 sales. Reflecting a console cycle now long in the tooth."
Services like Google Stadia won't help GameStop's situation.
See also: GameStop Slumps 40% to 16-Year Low as Gaming Passes It By
The video game sales slump is killing GameStop
GameStop Stock Is Plummeting. The Bonds Are Doing Fine.
GameStop Has Become the Poster Child for Retail Woes and Tech Disruption
Previously: GameStop's Future in Question after Failing to Secure Buyout
GameStop Posts Massive Loss as Pre-Owned Game Sales Plummet
Console options without disc drives could be GameStop’s final death knell:
The latest quarterly earnings report from GameStop doesn't show much sign of a turnaround for the long-troubled game retailer. Sales were down 26.7 percent year over year for the April through June quarter. Even accounting for permanent store closures and COVID-related reduced operating hours, so-called comparable "same-store" sales were still down 12.7 percent year over year. GameStop's already depressed stock is down nearly 8 percent on the news, as of this writing.
GameStop still publicly sees an "opportunity to capitalize" on the upcoming release of new Sony and Microsoft consoles, which could help turn its business around in the short term. But there's some reason to believe the coming generation of consoles could actually make GameStop's long-term prospects worse, thanks to console options that get rid of disc drives entirely.
[...] In an earnings call, GameStop CEO George Sherman acknowledged that "there has been growth in digitally downloaded games" and said GameStop is "not debating the growth of digital gaming." But he also tried to put a positive spin on the fate of GameStop's physical game sales going into the next generation of consoles.
"First, new consoles have a disc drive," Sherman said. "So for the next seven years, the consoles will play both the physical and digital software that we sell."
That's only partially true, though. Both the Xbox Series S and the PlayStation 5 Digital Edition actually won't have a disc drive. And while GameStop does sell some digital software, the bulk of its business comes from the sale of new physical games and high-margin pre-owned games.
The Complete Moron’s Guide to GameStop’s Stock Roller Coaster
The Complete Moron’s Guide to GameStop’s Stock Roller Coaster:
Last week, an epic short squeeze had driven GameStop stock up to $40 a share, a roughly 1,500 percent increase from its low point nine months ago. Little did anyone know at the time that this would only be the beginning of the story.
As I write this, GameStop's stock price is hovering around $350, up another 775 percent or so since I wrote about this situation eight days ago. By the time you read this, that number may be horribly outdated, as the stock continues to bounce up and down with extreme volatility hour by hour (it dipped down as low as $61 and peaked as high as $159 on Friday).
The current stock price now gives the company a market cap of about $26 billion.
On the surface, that means the market currently thinks GameStop is worth more than twice as much now (during a potentially existential threat to brick and mortar game sales) as it was during the height of the Wii boom in late 2007, when console game downloads were barely a thing.
Also at: Business Insider.
Melvin Capital, Hedge Fund Targeted by Reddit Board, Closes out of GameStop Short Position
Melvin Capital, hedge fund targeted by Reddit board, closes out of GameStop short position:
GameStop shares rise, fall and rise again in roller-coaster day of trading:
GameStop shares spiked Wednesday, reaching $348 apiece, only to come crashing down to $172 each early in the afternoon, causing multiple halts in trading of the stock due to volatility. Stocks then moved back up and ended the day at $265[*], a 7% increase for the day.
The past two days were a buying frenzy for the video game retailer's stock since Monday, when it was $136. That surge coincided with a lift to the entire stock market after Saturday's passage of the COVID relief bill in the Senate, as well as with an announcement that the video game retailer is developing a new e-commerce strategy, with Chewy.com founder Ryan Cohen heading that effort.
Cohen, who made a large investment in GameStop last year, will lead a committee seeking to transform GameStop a "technology business," the company said in a press release Monday.
GameStop shares skyrocketed from less than $20 in early January to more than $480 at the end of January thanks to a massive push by traders on the Reddit forum r/WallStreetBets. The stock price has dropped dramatically since then.
Price quote on Yahoo!
Also at BBC
Previously:
The Complete Moron's Guide to GameStop's Stock Roller Coaster
Console Options Without Disc Drives Could be GameStop's Final Death Knell
Web Site thinkgeek.com Moving in with Parent Company GameStop
GameStop Heading Towards Possible Doom
GameStop Posts Massive Loss as Pre-Owned Game Sales Plummet
GameStop's Future in Question after Failing to Secure Buyout
GameStop stock falls sharply amid 5M-share sales plan, SEC investigation:
GameStop's quarterly earnings report, released last night, contained relatively good news for the embattled retailer, including a smaller-than-expected operating loss and the company's first year-over-year increase in quarterly revenues in years. But GameStop's heavily inflated stock price is down significantly in morning trading on news that the company plans to sell more shares and the announcement that it is cooperating with a Securities and Exchange Commission investigation into the "meme stock" phenomenon.
In what CEO George Sherman called a "strong start to the year," GameStop's net sales were up over 25 percent to $1.3 billion in the fiscal quarter ending on April 30. That's despite "a roughly 12 percent reduction in the global store fleet due to our strategic de-densification efforts and the continued store closures in Europe during the quarter due to the COVID-19 pandemic."
Previously:
GameStop (The Stock) and GameStop (The Retailer) Continue to be Worlds Apart
GameStop Shares Rise, Fall and Rise Again in Roller-Coaster Day of Trading
The Complete Moron's Guide to GameStop's Stock Roller Coaster
(Score: 0) by Anonymous Coward on Thursday March 25 2021, @01:58PM (8 children)
(Score: 5, Interesting) by isostatic on Thursday March 25 2021, @03:30PM (7 children)
Depends who wants to buy it, but a lot of people value GME because of the possibility of a squeeze of the shorts.
I'm not qualified to know if there's anything in the whole 'sort squeeze' conspiracy. In many ways it sounds like a harmless (to those who don't believe and have dumped their life savings in at $300/share) version of QAnon.
If the theory is right, and Gamestop releases new shares, that would allow the short sellers to buy them to cover for a lot lower than they would than the theory goes.
Of course it would also increase the cash holdings of the company, which would increase the value of the company.
Personally I bought a couple of shares from my beer money, so if it does go APE-EMOJI To the MOON-EMOJI on ROCKET-EMOJI with DIAMOND-HANDS-EMOJI I've got tickets, and a legitimate claim to say "I was involved" in beer conversations. It's a hedge against the "I should have bought" feelings I get with bitcoin.
(Score: 0) by Anonymous Coward on Thursday March 25 2021, @04:03PM (2 children)
Why should Gamestop sell them for a lot lower?
(Score: 2, Informative) by isostatic on Thursday March 25 2021, @07:41PM (1 child)
Supply and demand.
If two hedge funds need 40m shares each and there’s only 70m available, they have to outbid each other and stick an go for 10k a share, costing the hedge funds 400b each (or continue to increase until they go bust)
If GameStop release 70m new shares at minimum 1k a share then hedge funds cover for 80b, or probably less because retail would sell at 950
The idea I think is that retail will corner the market and drain the hedge funds dry.
I do hope that happens, like the majority of the world I have no time for billionaire hedge funds
I can’t see them not being bailed out in some fashion by governemt even if the theories about them not having covered their shorts are true, but it’s better odds that the lottery, and the excitement lasts longer than a horse race.
(Score: 0) by Anonymous Coward on Friday March 26 2021, @02:05PM
Why are you even modded up. Gamestop holds existing shares. It doesn't have to release new shares. And it certainly doesn't have to release 70m new shares to make a lot of money.
(Score: 2) by FatPhil on Thursday March 25 2021, @04:21PM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 3, Funny) by istartedi on Thursday March 25 2021, @04:59PM
If you were, you'd have used multiple ROCKET-EMOJI. At least 3. It's the only way to make sure it goes up.
Appended to the end of comments you post. Max: 120 chars.
(Score: 2) by legont on Thursday March 25 2021, @11:53PM
Instead of selling stocks, they could buy some other better company. They could also issue debt at attractive prices. These are two most common ways to capitalize on high valuations.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 2) by Revek on Friday March 26 2021, @12:31AM
I bought two measly shares at 52. If it happens like the apes predict the short sellers will have to close their positions, eventually. These guys keep buying more and more of it. Me, I'm gonna ride it down in flames with my two shares. I will probably hold longer than I should. I may have already done that. I read today Michael Jordan is down 500 mill and the hedges that took a bath are to blame. They clipped these hedge fund weenies mid scam and its funny to read both sides of it. Hardly ever has there been a wider gap in the story each side is pushing.
This page was generated by a Swarm of Roaming Elephants
(Score: 2, Insightful) by Anonymous Coward on Thursday March 25 2021, @02:37PM (4 children)
The Gamestop valuation is not based on the company's potential to make profit. It's based on the ability to make profit from the numerous short sellers of Gamestop stock. Any analysis that ignores that fact is incredibly naive, or a shill for the hedge funds.
(Score: 1, Informative) by Anonymous Coward on Thursday March 25 2021, @02:50PM (1 child)
Isn't it really just making sure the massive amounts of shorts all go bust, and ultimately those bets are forced to buy the stock at high prices...driving the price up further? I think it's a pretty good example of how big of a joke the stock market is anymore.
(Score: 0) by Anonymous Coward on Thursday March 25 2021, @03:10PM
Why joke? You don't like the buzz around GameStop, you can ignore it and stay with assets you think have value.
Personally, I'd rather see the market starting to question the pricing of the Internet oligarchies. What's Twitter really worth now with President Trump gone?
(Score: 0) by Anonymous Coward on Thursday March 25 2021, @03:06PM
It's a zero-sum hot potato game.
(Score: 2) by FatPhil on Thursday March 25 2021, @04:22PM
Ditto Tesla. Anyone still in the ARKK ETF?
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by Freeman on Thursday March 25 2021, @03:20PM (3 children)
While, this seems like it might do GameStop some good, the Nintendo Switch is selling like hotcakes. It also uses physical cartridges and while they have an online store, look at all of their previous online stores. Best to stick to physical cartridges, which means, games for resale.
Still, my concern is how big of a bubble is there with this GameStop stock. I assume, it's just big enough to screw some of the smaller players. Thus, shouldn't be the monkey wrench that breaks the whole system.
Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
(Score: 3, Insightful) by isostatic on Thursday March 25 2021, @03:33PM (2 children)
Thus, shouldn't be the monkey wrench that breaks the whole system.
The system is broken already.
(Score: 2) by Freeman on Thursday March 25 2021, @03:46PM (1 child)
While it may be a symptom of a broken system. I was thinking of a more catastrophic failure.
Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
(Score: 2) by FatPhil on Thursday March 25 2021, @04:24PM
Remember - the blow off top still has a positive gradient!
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 0) by Anonymous Coward on Thursday March 25 2021, @03:33PM (2 children)
and the FTC doesn't give a flying fuck about it screwing retail traders
(Score: 0) by Anonymous Coward on Thursday March 25 2021, @03:35PM (1 child)
SN comment editing is just as fucked as Twitter
(Score: 2) by FatPhil on Thursday March 25 2021, @04:26PM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 4, Interesting) by Tokolosh on Thursday March 25 2021, @03:33PM (2 children)
GME has become a BTC equivalent. It has value only because it has value, there is limited supply, and can be easily traded and hedged.
The only difference from BTC, is that GME is regulated by the SEC, which some regard as a feature. Gamestock could potentially issue (mine) more GME, if they wanted, but seem to understand that it would be counterproductive.
Please, no talk of tulips, Ponzi, laundering, energy...
(Score: 2) by FatPhil on Thursday March 25 2021, @04:28PM
> Please, no talk of tulips, Ponzi, laundering, energy...
Hypocrite.
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 1) by anubi on Friday March 26 2021, @11:21AM
Still looks to me like the pump-n-dump again.
This ain't investing...it's gambling.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]