On Wednesday, GameStop announced its disappointing financial results for its first quarter period despite topping estimates in the past.
Its stock price rose by 5.75% to $26.11 per share on June 07. The company’s earnings per share (EPS) went down to -$0.14, still higher than the analysts’ -$0.12 forecast. However, it is lower than the previous $0.16 data.
Moreover, its revenue dropped to $1.24 billion, below the $1.36 billion consensus. Also, it is weaker than the last $2.23 billion reading.
Based on the quarterly report, there was a 17.65% earnings surprise. In the previous quarter, it was expected that GameStop would post a loss of $0.16 per share. But it produced earnings instead of a loss, leading to a 200.00% surprise.
Furthermore, the sustainability of the stock’s price movement would be based on the recently reported figures. In addition, future earnings will primarily depend on the management’s commentary during the earnings call.
In the first quarter, the video game retailer stated a net loss of $50.50 million. It cited restructuring costs worth $14.50 million linked to its European operations. Besides, more transition charges are anticipated to come in its second quarter.
Additionally, GameStop ended Q1 with $1.31 billion in cash and cash equivalents. On the other hand, they have no long-term debt outside an unguarded term loan due to the French government’s COVID-19 response.
Ryan Cohen as New GameStop Executive
CEO Matthew Furlong was fired from GameStop and assigned its board chairman, Ryan Cohen, as executive chairman.
Nonetheless, the company did not provide an apparent reason for firing Furlong. However, it emphasized the change in its quarterly securities filing.
In 2020, Cohen took a stake in the company. In 2021, he was one of the individuals named to the retailer’s board as part of the firm’s management deal. RC Ventures, his investment firm, now has an 11.90% stake in GameStop.
Also, the video game retailer stated that Furlong can receive payments and benefits. It is associated with a termination without cause. Moreover, he resigned from the entity’s board, winding down to just five members left.
