announced a larger-than-expected net loss for the first quarter and again declined to provide an outlook. Its stock fell, gained and stabilized roughly unchanged after trading hours.
The video game retailer reported an adjusted net loss of $157.9 million, or $2.08 per share. Analysts polled by FactSet had expected a loss of $1.45 per share. Sales of $1.38 billion beat estimates of $1.34 billion.
(ticker: GME) The stock initially fell 2.8% after the release, before rising 3.5% at 4:29 p.m., a fairly typical response to earnings reports that have included wild swings. The stock rose 0.5% shortly after the company’s earnings call.
The 5 p.m. ET earnings call lasted less than 10 minutes. The call operator said a brief question and answer session would follow CEO Matt Furlong’s remarks, but corrected that statement as no such session was scheduled. The company has not responded to analyst questions since its shares surged in January 2021.
During his remarks, CEO Matt Furlong touted efforts to invest in blockchain efforts. The company launched a wallet for cryptocurrencies and non-fungible tokens in May, which it says allows users to store, send, receive and redeem crypto and NFTs without leaving their web browser. . The wallet will be used in GameStop’s NFT marketplace, which plans to launch in the current quarter.
“We strongly believe that digital assets are central to the future of gaming,” Furlong said.
Experts doubt that GameStop’s NFT market can gain traction and have a significant impact on the company’s fortunes. The recent cryptocurrency selloff probably didn’t help.
“Our growth and the launch of new technology products, such as our digital asset portfolio and future NFT marketplace, demonstrate that we are in fact beginning to transform,” Furlong said.
Wednesday’s report could spark renewed interest in the meme stock as recent earnings reports preceded volatile trading for GameStop shares. The moves came despite uneventful earnings reports and a few brief quarterly conference calls with no questions from analysts.
GameStop stock has traded as low as $77.58 and as high as $344.66 for the past 52 weeks.
Wedbush analyst Michael Pachter said Barrons before the report he expected another brief conference call with prepared remarks from Furlong.
“Maybe a mention of NFT, Metaverse and crypto wallet; no details on their money-making strategy; no explanation of how their deep relationships with console gamers give them a competitive advantage with blockchain assets (NFTs) offered only in PC games; more promotion of their customer obsession; no progress in retail turnaround,” Pachter added.
Pachter, who is one of three analysts still providing FactSet with earnings estimates, was roughly in line with his predictions.
co-founder Ryan Cohen joined the company as a board member in January 2021, shares have traded wildly based on a mix of factors such as retail trader enthusiasm, interest from short sellers and aggressive options betting. Since Cohen became chairman of the board last June, the company has sought to turn the situation around by expanding its offerings, improving its logistics efforts and investing in customer service. The company has also added a series of new hires with expertise in e-commerce and tech companies, including Furlong who previously oversaw the Australian operations of Amazon.com (AMZN).
None of this matters for the stock in the short term. S3 Partners Director Matthew Unterman said Barrons that the short-selling analytics firm estimates that 14.92 million shares were recently sold short, representing 23.5% of the shares available for trading. A short position is a bet that a stock will fall, in which an investor borrows and then sells stock. Short-term interest is up 77% since the start of the year, according to Unterman. Such a typical short-term interest rate
the company has a short-term interest in low single digits – creates a cluttered trade and leaves room for possible short-term compression.
The company is also asking shareholders to increase authorized shares to $300 million at its annual meeting on Thursday. The company says the increased headroom would allow it to implement a stock split and provide more flexibility for future business needs.
Write to Connor Smith at [email protected]