![]() The company is headquartered in Grapevine, Texas, and is the largest video game retailer worldwide. is an American video game, consumer electronics, and gaming merchandise retailer. “It will be interesting to see what the holiday season holds for GameStop and how the company will continue to implement cost-saving measures in their path to profitability,” Oh added. This was followed by the resignation of GameStop’s chief financial officer in July. The second-quarter results follow an eventful few months for GameStop that saw the firing of its chief executive and the election of activist investor Ryan Cohen as executive chair in June. Related: Tupperware and Yellow have skyrocketed, but don’t confuse them with meme stocks “The growth in software sales is encouraging to see as hardware sales remained steady.” “GameStop’s 2023 results show encouraging signs towards the company’s ongoing transformation plans to regain its presence in the video game retail industry under its new leadership,” he wrote in an emailed statement Wednesday. However, John Oh, an analyst at Third Bridge, highlighted GameStop’s second-quarter software sales, which were $397 million, up from $316.4 million in the prior year’s quarter, and its hardware and accessories sales, which were $597 million, compared with $596.4 million in the same period last year. MarketWatch has reached out to GameStop with a request for comment. “The demise of GameStop is outside the 12-month window we use for our price target, but we expect the company’s demise at some point later this decade.” “Without a clear strategy to replace lost game sales, we think the company will see an acceleration of losses to $100 million annually, then $200 million, $300 million and more, with a likely runway of no more than five years,” the analyst added. Related: ‘It was like, wow, you could never short a stock again.’ Hedge-fund executive recalls when GameStop’s stock went parabolic. “However, should its revenues decline by $150 million-$200 million per year (which we think is highly likely), it may have trouble trimming costs fast enough to stem the growth of its losses.” “GameStop has around $1.2 billion in cash, and can weather $100 million of annual losses for a decade or more,” Pachter wrote. ![]() Of two analysts surveyed by FactSet, one has a hold rating and one has a sell rating for GameStop. Wedbush maintained its underperform rating for GameStop and lowered its price target to $6 from $6.20. The analyst also highlighted the growth of gaming subscription services and GameStop’s “lack of a clear strategy to enter new categories that have the potential to drive growth.” Other challenges faced by GameStop include far fewer big console-game releases going forward, with a noticeable shift to PC games, according to Pachter. “Digital downloads continue to grow, and unlike online sales of pet food (involving a physical product that requires logistical expertise to warehouse and deliver), video games can be downloaded to any of the game consoles that GameStop’s customers use to play their games.” “While we laud interim management’s plans to control costs further, it is difficult (if not impossible) for a company to ‘save its way’ to prosperity, particularly in the face of an existential threat such as the one faced by GameStop,” he wrote. However, GameStop still faces plenty of challenges, according to Pachter. Related: GameStop stock jumps after results top estimates, helped by international gains GameStop ended the quarter with cash, cash equivalents and marketable securities of $1.195 billion. Reflecting GameStop’s cost-control efforts, the company’s selling, general and administrative expenses were $322.5 million, or 27.7% of net sales, compared with $387.5 million, or 34.1% of net sales, in the same period last year. “GameStop delivered a quarter that showed signs of cost discipline, with revenues marginally better than expected and with losses significantly lower than expected,” Pachter wrote in a note released Thursday.
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