GameStop Stock up 60% today after Board changing and Earnings news

GameStop  (Ticker: GME) – shares skyrocketed on Wednesday as investors reacted to the videogame retailer’s recently named board members and encouraging holiday sales results.

Earlier this week, the retailer reached an agreement with RC Ventures to place three of the New York activist investor’s nominees — Alan Attal, Ryan Cohen and Jim Grube — on the board.

The Grapevine, Texas-based company spiked a record 62% Wednesday as retail investors flocked to the struggling company. Traders betting on Cohen’s plans to transform the chain in the image of his highly successful Chewy helped fuel the now three-day rally with the stock shaking off years of underperformance.

At the same time GameStop reported encouraging numbers:

  • E-Commerce sales, which are included in comparable store sales, rose 309% and represented approximately 34% of total company sales, with total worldwide E-Commerce sales year to date reaching over $1.35 billion, far exceeding the Company’s $1.0 billion growth objective;
  • Total comparable store sales increased 4.8% compared to last year and reflected a 29.6 percentage point sequential improvement from the third quarter of fiscal 2020.  These positive results were adversely impacted in the high single-digit to low double-digit percentage point range, as a result of a significant reduction in consumer traffic related to the increase in COVID-19 cases;
  • Net sales were $1.770 billion, a 3.1% decrease compared to 2019, as strong console demand was offset by store closures under the Company’s planned de-densification strategy, temporary store closures mandated by local governments due to COVID-19, and industry-wide limited supply of new gaming consoles, and supply chain constraints broadly;
  • Regional Sales, in Australia/New Zealand, where the Company’s operations were materially less impacted by the effects of the COVID-19 pandemic, total comparable sales for the nine-week period increased approximately 31%, outperforming the Company’s other operating regions.

A statement from GameStop said the three executives have “deep expertise in e-commerce, online marketing, finance and strategic planning.” The addition of Cohen and the other new directors is positive given their success previous success with other companies and vision to “make GameStop a more digitally focused retailer,” Telsey analyst Joseph Feldman wrote in a Tuesday note, according to Bloomberg.

If the new board members manage to continue growing E-commerce sales like this GameStop stock is destined for new highs.

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