GameStop Corp. swung to a surprise profit in the fourth quarter and beat analysts’ estimates for revenue, sending the shares soaring 36 per cent extended trading.
Net income was US$48.2 million, the first profit in two years, and compared with a loss of US$147.5 million a year earlier, the Grapevine, Texas-based company said in a statement Tuesday. Net sales fell 1.2 per cent to US$2.23 billion in the three months ended Jan. 28, but that was higher than analysts’ projections of US$2.18 billion.
The shares surged to US$24.15. Very few analysts currently cover the so-called meme stock, whose shares have fluctuated wildly over the past two years. GameStop, known for its consumer electronics and gaming merchandise, has struggled with profitability as the games industry has moved away from physical discs to online downloads. The industry has been further hamstrung by supply chain constraints on consoles and a relatively light schedule of new game releases last year. US video game sales dropped 5 per cent in 2022, according to industry researcher NPD Group.
Activist investor Ryan Cohen joined GameStop’s board and became its chairman in 2021, embarking on a reorganization that included ousting the chief financial officer and company-wide layoffs. A push into digital assets — the company announced a partnership with now-bankrupt cryptocurrency exchange FTX US last fall — has so far produced mixed results.
Retail traders turned GameStop into a meme stock during the pandemic, wildly pumping up its share price based on social media chatter unrelated to the company’s fundamentals.
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