GameStop Q3 Earnings Preview

GameStop Corp. (NYSE:GME) is set to report its third-quarter earnings after market close on Tuesday, giving investors a glimpse into holiday shopping demand.

Earnings Estimates

Analysts predict GameStop will post a revenue of $887.7 million, a decline from $1.08 billion in the same quarter last year. The company has struggled recently, missing revenue estimates for four consecutive quarters and seven of the last ten.

Expectations include a loss of 3 cents per share, down from breakeven earnings last year. GameStop’s performance has been mixed, beating earnings per share estimates in five out of the last ten quarters.

Key Items to Watch

Investors are keen to hear about the company's cash strategy, especially with $4.2 billion in cash and equivalents on hand. There are ongoing discussions about whether GameStop will invest in new areas, including trading cards and collectibles.

Will GameStop Buy Crypto?

Many investors are eager to see GameStop invest in Bitcoin. Other companies like MicroStrategy and Tesla have already made significant Bitcoin purchases. In late 2023, GameStop updated its investment policy, allowing CEO Ryan Cohen to manage cash investments, including stocks and potentially cryptocurrency, without needing board approval. However, no such investments have been announced yet.

Price Action

GameStop's stock was down 0.21% to $29.00, with a 52-week range from $9.95 to $64.83. The stock is up 77% year-to-date in 2024.

Investors are closely monitoring Roaring Kitty (Keith Gill), who recently tweeted about the company, causing a spike in stock prices. His insights could provide clues about the company’s future direction.

GameStop's announcement of a Bitcoin purchase would be a monumental event in both the stock and cryptocurrency markets, but for now, it remains a hope for investors.

Net Sales by Segment (Q2):

• Hardware and Accessories: $451.2 million (previous year: $597.0 million)
• Software: $207.7 million (previous year: $397.0 million)
• Collectibles: $139.4 million (previous year: $169.8 million)

Analysts continue to express concerns about GameStop's lack of strategic direction and the impact of store closures on future profitability.