Published - September 8, 2022 @ 12:13 PM (EET)
Meme stock favorite, GameStop Corp. (NYSE:GME), reported a smaller-than-expected quarterly loss on Wednesday and announced it has partnered with crypto exchange FTX US to increase its presence in the cryptocurrency space.
Led by billionaire Sam Bankman-Fried, FTX said the collaboration aims at introducing more GameStop customers to FTX's community and its marketplaces for digital assets.
While the market has been skeptical about Chairman Ryan Cohen's push of its brick-and-mortar business into crypto, Cohen has plowed ahead, seizing on gamers as being among the NFT industry's biggest target market.
"The FTX partnership is unlikely to yield meaningful revenue or profit, but it sounds good, so that's a positive,"
said Wedbush analyst Michael Pachter.
During the investor call, newly appointed CEO Matt Furlong urged patience, saying GameStop must undergo a significant transformation to keep up with customers.
"Our path to becoming a more diversified and tech-centric business is one that obviously carries risk and will take time,"
Furlong said.
EARNINGS DETAIL
The Texas-based company reported $1.14 billion in net sales for the quarter, down from $1.18 billion a year earlier.
On an adjusted basis, earnings per share were $0.35 compared to TipRanks' estimates of $0.41 per share.
Also, changing its retail strategy with a focus on toys and collectibles at its stores, GameStop's sales reached $223.2 million in the quarter, up from $177.2 million in the year-ago period.
Among other moves, the company hired more than 600 people with talent in areas such as blockchain while also reducing shipping times, citing Furlong's comments to modernize its business after years of underinvestment.
NOW WHAT
GameStop didn't issue any guidance for the current quarter and hasn't provided an outlook or taken any questions during earnings calls for about two years.
Inventory in the quarter was up from $596.4 million to $734.8 million. The company said it intentionally bulked up on merchandise to keep up with customer demand and manage supply chain challenges.
Following the report, Wednesday, shares of the company climbed about 10% in after-hours trading.
