GameStop wins are coming. What to expect.
After a few relatively calm months,
the stock is back in the spotlight. The video game retailer-turned-sensation is expected to release its July quarter results after the market closed on Wednesday.
The consensus among the four analysts still covering the stock and providing estimates to FactSet is that the company (ticker: GME) will report an adjusted second quarter net loss of 67 cents per share. They forecast sales of around $ 1.23 billion, down from $ 1.28 billion in the first quarter, but improving from $ 942 million in the second quarter of last year.
For Wednesday night’s report, options markets imply a 9% to 12% move, up or down, after earnings. If the last two reports are any indicator, expect volatility.
Updates from the company’s new management team will be more important to investors. Chewy activist investor and co-founder Ryan Cohen joined GameStop’s board in January, which sparked the initial surge in action, and became chairman of the board in June. CEO Matt Furlong and CFO Mike Recupero — both
alumni – began their duties at GameStop on June 21 and July 12, respectively, so this will be the first results report for the two executives.
By hiring a large number of executives with substantial e-commerce experience and investing in order fulfillment, the company has reported progress in efforts to revamp GameStop’s digital presence and customer service efforts. Still, Wedbush analyst Michael Pachter said Barron the company gave no substance to its strategic ambitions.
“They want to be like Amazon,” added Pachter. “I expect them to keep the mystery alive.”
In June, Cohen said he would not make high promises or wire his strategy to his competitors. Still, he listed goals such as “making customers happy and generating long-term shareholder value”. A substantial update, or significant progress in its recovery efforts, could provide a spark for the stock.
Still, David Trainer, CEO of investment research firm New Constructs, says stocks trade on memes dynamics rather than fundamentals. He believes the stock price would be closer to $ 30 if it traded on the basis of company fundamentals.
“The business results that are involved in the current GameStop share price are far beyond what a reasonable person would expect the company to achieve,” Trainer said. “Even if GameStop’s management transforms the business into a much bigger, more profitable business, the stock is unlikely to increase as this business dynamic is already built into the price.”
With GameStop shares down 1.9% to $ 199 on Tuesday, the stock was still up 2,500% last year and 956% year-to-date. Shares are down 34% from their June 7 close. While it is difficult to determine what makes GameStop stocks move on any given day, short seller activity, option volume, dynamic trading, and online chatter are some of the non-fundamental factors to consider. into account.
Ihor Dusaniwsky, managing director of short sale analytics provider S3 Partners, estimates GameStop’s short interest at $ 1.41 billion. His estimate of 6.94 million shares short represents about 11% of the shares available for trading.
“Over the past week, we’ve seen significant short hedging,” Dusaniwsky said, noting that short stocks fell by about 306,000 stocks, worth $ 62 million, even as the share price fell.
Write to Connor Smith at [email protected]