GameStop Tanks On Another Possible Offering

GameStop taps shareholder Ryan Cohen to lead e-commerce shift: Bloomberg

GameStop (GME) missed Q4 estimates but reported strong comp sales in early Q1, cut its debt, and named a new COO. GME stock tumbled after disclosing a possible secondary stock offering.

GameStop Earnings

EPS rose 5.5% to $1.34, below views for $1.46, as revenue fell 3.3% to $2.12 billion vs. views for a 2.2% increase to $2.24 billion. Same-store sales grew 6.5%, missing consensus estimates of 8.1%. But comps in early Q1 are surging.

“We are off to a strong start in 2021 as February comparable store sales increased 23%, led by continued strength in global hardware sales,” said CEO George Sherman said in a statement.

Global e-commerce sales soared 175% in Q4. Gross margin shrank to 21.1% from 27.2% a year ago due to a shift toward lower-margin consoles amid the launch of new consoles, increased freight and credit card fees from e-commerce sales, and broader promotions.

Overall debt was reduced by $57 million, and the company had $635 million in cash, up from $513.5 million a year ago. But GameStop revealed in a separate filing that it’s considering the sale of additional share.

After the earnings report, management held a conference call for just 20 minutes without saying much that was new — and didn’t take any questions.

The company also named Jenna Owens as COO. She previously worked as the director of distribution and fulfillment at Amazon (AMZN) with stints at Alphabet’s (GOOGL) Google and Honeywell (HON).

Earlier Tuesday, GameStop announced that Frank Hamlin, its chief customer officer, will step down on March 31. Last month, Jim Bell, GameStop’s chief financial officer, announced he was leaving the company on March 26.

The departures come as activist investor and Chewy.com (CHWY) co-founder Ryan Cohen pushes for GameStop to revamp its business model and add more offerings online.

Stock: Shares sank 18% to 148.79 on the stock market today. GME stock soared as high as 483 in late January but tumbled in February before rebounding slightly and falling again this month. GameStop stock remains above its 50-day and 200-day lines as well as year-ago levels, according to MarketSmith chart analysis. Among other stocks in the Reddit rally, AMC Networks (AMC) lost 5% Wednesday, and Discovery (DISCA) dropped 7%

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