GameStop Corp. (GME) on Thursday announced its financial results for the third quarter. Its adjusted loss was narrower than analysts’ average estimate, but revenue fell short of expectations, sending its shares down more than 17 percent in the pre-market trading Wednesday. Store closures due to the pandemic, besides increasing competition from online-game sellers, weighed on the results.
The Grapevine, Texas-based videogame retailer reported a loss of $18.8 million, or 29 cents a share for three months ended October 31, as compared to a loss of $83.4 million, or $1.02 a share in the same period of 2019. On an adjusted basis, the loss was 53 cents per share, while analysts were expecting GameStop to report a loss of 85 cents.
Revenue for the quarter came in at $1 billion, down 30 percent from the year-ago quarter, and missed the consensus forecast of $1.09 billion.
Speaking on the results, CEO George Sherman said, “we begin the fourth quarter with unprecedented demand in new video game consoles that launched in November, which drove a 16.5% increase in comparable-store sales for the month, despite being closed on Thanksgiving Day and the impact of COVID-19 related store closures, which affected most of our European footprint.”
The company recently disclosed that it has shut 462 stores as of Oct. 31, higher than 321 store closures last year. Looking forward, it plans to close more than 1,000 stores by the end of the first quarter next year.
Few industry experts suggest that the company should significantly decrease its dependence on physical store sales, and instead boost its efforts to strengthen its foothold in e-commerce and digital streaming markets. They want GameStop
The average price target estimate for GameStop stock is $6 per share, with a high price target forecast of $19 per share and a low price estimate of $1.60 per share. When it comes to recommendations, most analysts have a “Hold” rating for the stock.
Recent Stock Performance
The stock mostly traded in the range of $4 to $6 between May and August, before finally rising over $7 per share in September. The increase in the stock price at the start of September was mainly attributed to the company’s biggest investor Ryan Cohen comments, wanting the video game retailer to transform itself into an e-commerce platform that can compete with the likes of Amazon. However, GameStop
A month later, the company inked a multi-year agreement with Microsoft, sending its shares up more than 44 percent to $13.49 on October 8, marking the highest surge of the year. According to the terms of the agreement, Microsoft will help GameStop to upgrade its stores with cloud and hardware services.
Overall, the stock has climbed more than 170 percent so far this year.