GameStop Corp. Class A Report reported its Q1 results for 2022. The company missed earnings by a large margin but managed to beat revenue expectations. And, to the surprise of few who follow GME closely, the company provided no financial guidance for the following quarter.
While not particularly distressed by any one factor, investors liked what they saw. GameStop shares closed up 10% the day after the company''s earnings (though some of this is possible due to the wider market, which was still green on the day).
Business As Usual: Figure 1:GameStop Stock Q1 Earnings
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GameStop Q1: Earnings Miss, Revenue Beats
GameStop reported a $2.08 loss per share in Q1 and went well below expectations of a $1.22 loss per share. On the lead line, the company beat the markets $1.32 billion consensus, with revenues of $1.38 billion. Revenue growth YoY recorded 8%.
GameStop''s EPS surprise and predictions for the quarter
Searching for Alpha
According to GameStops'' management, long-term revenue growth should be the key factor that shareholders can follow in order to influence GameStop''s successful execution.
GameStop ended Q1 with $1.04 billion in cash and cash equivalents, which represents a $340 million increase. That substantial cash pile puts the company in a solid fiscal position, even if it is substantial inventory investments, headwinds, reducing demand, and ongoing global supply chain problems.
A Transformation of GMEs Business
GameStop is experiencing a transformation from a "decaying brick-and-mortar retailer" into a technology-led business, according to Furlong''s vision for GME. It''s possible to include physical stores, e-commerce, digital marketplaces, and online communities to meet game expectations.
The company''s focus was shifted to two key areas in Q1: (1) rebuilding and strengthening its commerce business, (2) growth opportunities in the crypto, NFT, and Web3 gaming industries.
GameStop''s cryptocurrency wallet has been launched last month, where users may securely store, send, and utilize Ethereum, NFTs, and ERC20 tokens under the control of GameStop''s Ethereum wallet. A release of the GameStop NFT Marketplace platform is scheduled for roughly late Q2, and probably July.
A Brief, Quiet Earnings Call
GameStop''s stock has not provided financial guidance nor opened earnings inquiries, according to the investor. This practice has largely been started due to the unpredictability of the pandemic, but it is likely to continue in the near future.
Ryan Cohen has encouraged people to slam on a company''s financial outlook when challenged on this front. Cohen has often cited Apple (Cohen is the company''s largest individual shareholder): the tech behemoth suspended guidance during the epidemic and has worked to keep its strategy away from the eyes of competitors.
Cohen disapproves of firms that "spend time accommodating Wall Street" and believes that managements time should be better spent concentrating on execution to improve the experience of the company''s customers.
While plenty on Wall Street continue to criticize Cohen''s "non-guidance model" for its opaqueness, many of GameStop''s retail shareholders don''t seem to care about it.
This time around, GME was unconcerned. Even after reporting a fairly conundrum, GME shares increased by 10%, indicating that GameStop''s shareholders (a.k.a the apes) will remain in the game whether the company''s fundamentals are functioning fairly, badly or sideways.
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