게임스톱(GME) 1분기 수익: 예상 대상

GameStop (GME) stock has been on fire over the last week, surging more than 30% and reaching a six-week high Thursday. Unfortunately, little of those gains are related to the company’s fundamental business, but management can sustain GME’s momentum if they speak positively about the company’s ability to pivot into high-growth areas.

Investors are hoping they can do just that when the company reports first quarter fiscal 2022 earnings result after the closing bell Wednesday. The stock moved higher after the SEC charged broker-dealer TradeZero America and co-founder Daniel Pipitone for making false claims about the firm’s actions at the height of the “meme stock” craze, which sent GameStop stock soaring north of $400 per share. TradeZero America had said to their customers that they didn’t restrict buying GME stock during the frenzy; however, an investigation discovered that they did in fact restrict purchases for a period of ten minutes at the direction of the clearing broker and Pipitone.

“After the halt, TradeZero and Pipitone made misleading public statements via interviews, social media, and in a press release in an effort to distinguish their company from brokers that restricted trading during that period,” said the SEC. TradeZero was fined $125,000 for the incident.

More pressing than this story is how GameStop plans to move in the future. Digital downloads have hurt the company’s primary business model and revenues and cash flow. The brick-and-mortar retailer is once again trying to re-invent itself as it has done over the last five years. Previous attempts to pivot into stronger growth areas have come with mixed results. The company’s latest pivot involves an NFT digital asset marketplace and crypto gaming. Investors will want details on whether (or how) these initiatives will power the company forward.

For the quarter that ended April, Wall Street expect the Grapevine, TX-based company to lose $1.22 per share on revenue of $1.32 billion. This compares to the year-ago quarter when earnings it lost 45 cents per share on revenue of $1.28 billion. For the full year, ending January, the loss is expected to be $5.28 per share, wider than the year-ago loss of $4.56 per share, while full-year revenue of $6.26 billion would rise 4.1% year over year.

While GameStop shares have suffered immensely over the past six months, falling some 30%, and losing 46% in twelve months, the rate of decline is counter to the fundamental improvements the company has made within the business. The company’s balance sheet is in a much stronger position with $1.2 billion of net cash. That said, revenue has slowed drastically from pandemic highs. In terms of its pivot to NFTs, GameStop believes it is well-positioned to capitalize on blockchain gaming and cryptocurrency, which it believes can grow to a total addressable market of $40 billion.

However, what it needs is a bridge between growing the NFT business and its current core business, which is amassing losses in the meantime. In the fourth quarter, it missed its profit estimates, reporting an adjusted loss of $1.86, which missed Street estimate by $2.70. This is even as revenue of $2.25 billion surpassed Street estimates by nearly $40 million. The reason for the profit miss was due to margin erosion. Operating margin came in at negative 7.4%, compared to a positive 0.9% in the same period a year ago.

All told, it wasn’t a terrible quarter, but it does highlight the importance of the company’s ability to pivot into the NFT business. On Wednesday for the stock to maintain its upward movement, GameStop must show significant improvements on the profit side.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.