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Investors are finally looking at the fundamentals of GameStop following a commercial frenzy fueled by Reddit earlier this year.
Here’s what the company did after the bell on Tuesday.
- He published missing quarterly results Wall Street estimates.
- In its latest executive shake-up, the company named former Amazon and Google director Jenna Owens as its new chief operating officer.
- And in an indication of the transformation that has made some investors excited about the shares, the company said that global e-commerce sales increased by 175% in the last quarter and accounted for more than a third of its sales during this period.
- GameStop also admitted in a file that it intends to sell additional capital shares.
The initially traded shares were higher after the bell, but fell by about 7%, traders probably reacting to the news about the potential sale of the shares, an action that many investors and analysts considered prudent, given the preliminary period fueled by Reddit.
“Starting in January 2021, we assessed whether to increase the size of the ATM program (on the market) and whether it is possible to sell shares of our Class A common stock under the ATM program increased during fiscal year 2021, mainly to fund the acceleration of our initiatives transformation and general working capital needs “, said a statement from the company.” The timing and value of sales under the ATM program would depend, among other factors, on our capital needs and alternative sources and operating costs. capital available to us, market perceptions of us and the current trading price of our Class A shares. “
For the period ending in January 2021, GameStop earned $ 1.34 per share with revenue of $ 2.12 billion. Wall Street expected GameStop to report $ 1.35 earnings per share with revenue of $ 2.21 billion, according to the Refinitiv average of the six analysts covering GameStop.
This marks GameStop’s first adjusted quarterly profit beginning in the fourth quarter of 2020. GameStop earnings in the fourth quarter generally account for the majority of the company’s annual earnings, boosted by holiday sales. Sales in the same GameStop store increased by 6.5%.
“We are off to a strong start in 2021 as comparable store sales in February rose 23%, driven by the continued strength of global hardware sales. As we look to the future, we are excited about the opportunities ahead.” as we begin to prioritize a long time – digital and e-commerce initiatives in the long run, as we continue to run our core business during this emerging console cycle, “GameStop CEO George Sherman said in a statement of income.
Tuesday’s earnings mark GameStop’s first quarterly report on GameStop trading mania in January.
In January, a brief epic push from the GameStop stock shocked Wall Street and drew attention to an emerging class of retail investors on social media platforms such as Reddit. The GameStop share price rose to $ 483 per share and subsequently lost 90% of its value. The controversy attracted the attention of Wall Street and Washington.
Since the rise and fall of GameStop in January, shares have continued to rise more, with shares up nearly 70% this month. The GameStop stock has grown by more than 860% in 2021.
GameStop has a market capitalization of nearly $ 14 billion, more than 10 times the market value of $ 1.3 billion held by shares at the end of last year. A year ago, GameStop’s market capitalization was $ 245 million.
GameStop shares have traded positively for the company’s new developments over the past five months, such as the appointment of Chewy co-founder Ryan Cohen on GameStop’s board of directors and a focus on GameStop technology and the e-commerce transition.
Earlier this month, GameStop announced it was turning to Cohen to lead the transition to e-commerce. Cohen is the chairman of a special committee on GameStop’s board of directors to help transform it. Board members Alan Attal, former chief executive of Chewy operations, and Kurt Wolf, investment director of Hestia Capital Management, are also on the committee.
The committee has already appointed a chief technology officer, hired two directors to lead customer service and e-commerce fulfillment, and has begun looking for a new CFO with experience in technology or e-commerce. GameStop previously announced that current CFO Jim Bell will resign on March 26. Citing sources familiar with the matter, Business Insider reported that Bell was fired by Cohen.
GameStop said on Tuesday that its customer director Frank Hamlin will resign.
The company said it continues to suspend guidance.