GameStop lost $400 million from April 2021 to April 2022, which for some reason hasn't been a concern for retail investors looking to pump up the stock with meme rallies. We determined in a recent article that investing in GameStop is risky because the company needs to make some significant moves to turn its business around. This leads us to the most critical question… Should You Invest in GameStop? ![]() ![]() GameStop has also been known as the leader in buying and selling video games, but there’s uncertainty regarding the future of that business as the world continues to go to digital downloads. Consumers’ struggles with soaring inflation won’t help the situation. While consumer spending on video games increased 29% in 2020 and then grew an additional 8% in 2021, this research firm believes that figure will decline by about 9% in 2022 due to supply chain issues and a lack of big hits in the video game space. However, in a recent report from the NPD Group, it looks like video game spending dropped by 13% in the second quarter of 2022. With so many people at home due to pandemic-related lockdowns and stimulus money hitting bank accounts, there was an increased demand for video games a couple of years ago. In August, news came out that the NFT marketplace wasn’t performing well, and experts were concerned about whether this venture would be profitable or just another distraction. The NFT marketplace just went live on ImmutableX IMX after operating as a public beta since July. GameStop has been working on diversifying its revenue streams by latching on to the blockchain movement by launching its NFT marketplace. We will have to see how the collectibles revenue sector does for the company. Some customers on social media complained that they preferred it when GameStop focused on video games. A recent story on Reddit highlighted how GameStop employees were laughing at the idea that the stores were now selling what they categorized as “random junk,” with items such as a lemon-powered clock and an algebra tile set being the highlights. The company also focused on expanding its e-commerce platform to sell more collectibles and accessories. The company is also trying to transition to online sales, where they also offer collectibles and more. GameStop was able to control some of the losses by dropping the brick-and-mortar location count from 7,276 at the end of the fiscal year 2017 to 4,573 stores at the end of fiscal year 2021. To improve profit margins, the company closed down several physical locations. Here are some of the recent changes that Gamestop has made. Investors have been hoping that GameStop could turn their business around. The company’s stock is down about 30% for the year. Tryq New Select Investment: Short Squeeze Kit | Q.ai - a Forbes company What’s Next for GameStop? However, these lackluster financials seem to have no bearing on the meme stock-buying frenzy. The company still has $908.8 million in cash and just $32.1 million in long-term debt, so the balance sheet is still considered healthy. With net sales dropping 4% year over year due to struggling software and hardware sales, the operation losses went up to $107.8 million from $58 million. Sales from collectibles (a growing revenue stream for the company) were at $223.2 million.This worried many investors even though the company stated that they were preparing for possible supply chain disruptions. ![]() GameStop had a negative return on equity of 33.28% and a negative net margin of 8.57%.Revenue was reported at $1.14 billion, short of analysts’ expectations of $1.27 billion and down 4% year over year.Earnings per share were negative $0.35.These are some of the notable highlights from the financials of GameStop for the second quarter: GameStop last released its financial results on September 7 when they shared how the company performed for the period ending on July 31, 2022.
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