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GameStop Corp.’s stock was falling 3% in extended trading Wednesday after the videogame retailer missed analysts’ revenue expectations with its fiscal third-quarter results, despite coming in better than anticipated on the bottom line.
The original meme-stock darling reported a net loss of $3.1 million, or 1 cent a share, compared with a net loss of $94.7 million, or 31 cents a share, in the prior year’s quarter. On an adjusted per-share basis, GameStop
GME,
broke even, whereas analysts surveyed by FactSet were expecting an 8-cent loss.
Revenue was $1.078 billion, compared with $1.186 billion in the prior year’s quarter. Analysts expected GameStop to report revenue of $1.182 billion.
Related:GameStop stock’s massive rally driven by fresh wave of speculative bets
In a filing, GameStop said that net sales in Australia, the U.S. and Canada decreased by 16.8%, 13.3% and 9.7%, respectively, while net sales in Europe grew 12.8% over the same period, boosted by decreased supply constraints.
The company exited the quarter with cash and cash equivalents of $1.210 billion, compared with $1.195 billion at the end of the prior quarter.
As with its previous round of earnings, GameStop said it would not be holding a conference call.
Related: It’s the end for the ETF devoted to meme stocks, which has fallen 60% since inception
In the filing, GameStop noted that its board of directors approved a new investment policy Tuesday, permitting the company to invest in equity securities, among other investments. The board has given Chairman and Chief Executive Ryan Cohen the authority to manage the investment portfolio.
Cohen was named GameStop CEO in late September, the latest chapter in his attempt to breathe new life into the company.
John Oh, an analyst at Third Bridge, said GameStop continues to face stiff competition from the likes of Amazon.com Inc.
AMZN,
“While the softness in Q3 sales was to be expected, our experts have said that the increasing market-share losses to mass merchants and e-commerce giants such as Amazon will continue to be an uphill battle for GameStop,” he said in an emailed statement Wednesday.
Previously: Ryan Cohen becomes GameStop CEO and social media reacts: ‘Changing the paradigm on Wall Street’
While cost-savings and profitability continue to be a focus for GameStop, there still may be quite a ways to go, according to Third Bridge. “In one example, our experts have noted that despite all the store closures we’ve already seen, GameStop still likely has twice as many stores today than what is needed,” said Oh.
In its filing, GameStop said that it has “thousands of stores” and e-commerce platforms. However, store-related costs have decreased $5.8 million in the current year as a result of store closures, primarily in Europe, it added.
GameStop shares, which have enjoyed a recent meme-like rally, are down 19.6% in 2023, compared with the S&P 500 index’s
SPX
gain of 18.5%.
