GameStop shares plummet after the retailer releases SEC subpoena, and fails to meet earnings estimates
GameStop reported the results of its fiscal third quarter that showed either continuing struggles or indications of a bigger change and an acknowledgement by management that the company is expanding into new areas such as non-fungible tokens and blockchain. There’s still no agreement.
On the side of caution There are Wall Street analysts like Wedbush’s Michael Pachter. He maintained his Underperform rating and lowered his price target for GameStop stocks (ticker: GME) to $45 from $50 in a research note entitled “Another Quarter, Still No Turnaround Strategy in Sight.” This is a warning that shares could be wiped out by two thirds of their value, so like going to a site like casino online NetBet there is no guarantee of winning money on this.
“Yet again, management failed to provide clarity around a long-awaited digital transformation plan that has been hinted at in the past but has yet to crystallize,” Pachter said in his report. “Instead, management spared a few details with respect to shipping, headcount expansion, a new credit facility, and the potential of exploring blockchain technology.”
Analyst at Jefferies Stephanie Wissink was more upbeat however she did cut her price, bringing her goal to $180 instead of $190. In an email on Thursday, she wrote that the GameStop report and earnings call following it indicated signs of improvement.
“We recognize that management is speaking to both a sophisticated institutional investor base AND individual shareholder enthusiasts, providing just enough strategic visibility but yet leaving room for both dreamers and discounters,” Wissink wrote.
She also cited the mix of sales at the store that now includes more than just PC gaming hardware, which means lower dependence on gaming, which are being sold more and more through digital channels. GameStop’s shift to adapt to an increasingly technologically-driven world with investments in people and infrastructure, which will continue until 2022, is also a positive sign, according to the analyst.
She retained a “Hold” rating on the stock.
“Hold” and “HODL,” to mean “hold on for dear life,” are rousing cries for the hordes of stock-related followers on the social-media platform Reddit. Retail investors are pleased with the results, and received word from GamingStop’s newly appointed CEO Matt Furlong that his team is focused on growth at the top of the line in market share.
Wall Street has long been worried over the business’s position as the business of videogames shifts towards downloads. Net losses for the company increased and margins fell, despite the shift towards selling accessories and hardware. However, the wager on TVs and other hardware resulted in higher-than-expected sales.
The majority of investors who retail invest in the stock believe that putting a heavy stress on earnings not being met is simply FUD, which means the words fear, uncertainty and doubt.
These customers were also thrilled over Furlong’s announcement during the company’s earnings conference that GameStop is investigating efforts in blockchain technology, tokens that are non-fungible as well as web 3.0 gaming, which is essentially a metaverse idea that lets players earn tokens from games as well as items that have real-world worth.
The company also revealed that on August 25, Securities and Exchange Commission issued an order to produce additional documents as a follow-up to an earlier-publicized request. GameStop isn’t expecting the investigation to negatively impact the company.
The only thing that isn’t debated is that GameStop stock fell 10 percent to $156.01 during trading on Thursday afternoon. In recent periods, GameStop stock has quickly bounced back from post-earnings issues at times even within the initial post-earnings trading day.
As of now, GameStop is within the six-month range it’s found itself in, but with plenty of volatility. It’s a different situation if the stock soaring over a six-month low of $146.80 and an all-time maximum of $302.56.