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Shares of GameStop (NYSE:GME) are up over 5% in premarket Thursday after the company reported Q2 results and announced a partnership with cryptocurrency exchange FTX US.
GameStop reported a Q2 loss per share of $0.36, which is better than the analyst estimate of a loss per share of $0.42. Revenue for the quarter came in at $1.14 billion, worse than the consensus estimate of $1.27 billion. The company reported it had $908.9 million in cash and cash equivalents at the end of the reporting period.
Moreover, the retailer announced that it has entered into a partnership with FTX US with an aim of introducing more GameStop customers to FTX’s community and its marketplaces for digital assets.
A Wedbush analyst is not too impressed by the announcement as he remains skeptical that it “will drive meaningful revenue or profit contribution.” The analyst cut the price target to $6 from $7.50 on Underperform-rated GME shares.
“GameStop’s digital transformation efforts have missed the mark so far, leaving it to rely on a declining core business,” the analyst added in a client note.
Vital Knowledge analysts noted that the majority of the company’s business is in the state of “extreme secular decline,” while adding that investors should not pay attention to GME’s “endless series of gimmicky announcements”.
A Jefferies analyst also cut the price target as she went to $26 from $27.50 amid cash burn concerns. Still, the analyst reflected more positively on GME stock than her colleagues at Vital Knowledge and Wedbush.
“We are encouraged that profitability improvement goals were set for coming quarters, a result of improved costs. GME has a passionate shareholder base, but in current mkt conditions, somewhat unclear LT growth prospects remain a key source of speculation & debate,” she wrote in a research note.
