The company reported growth in net sales but missed earnings estimates, with net losses over the quarter jumping $105 million during the last quarter.
GME price fell after hours and has extended losses overnight.
GameStop (GME) reported its financial results for the third quarter on Wednesday, with the company’s revenue beating expectations.
The video game retailer, the world’s leader in the sector, posted revenues of $1.30 billion for the third quarter ending 30 October 2021, surpassing forecasts of $1.19 billion. The company’s sales grew from $1.005 billion year on year compared to the same quarter a year ago.
GameStop puts the strong sales seen over the three-month period down to a host of “new and expanded brand relationships,” with major players in the loop including tech giants Samsung and LG. others companies that played a role in GameStop's growth were Razer and Vizio, according to the financial records released 8 December.
The report also showed company inventory increased over the quarter to $1.141 billion, with the quarterly close higher than the $861 million recorded during the third quarter of 2020. GameStop says this is a reflection of its focus on front-loading investments, targeted at inventory that meets the rising demand from its customers. The increase is also meant to cushion the company against supply chain issues, according to the financial report.
The report however showed that earnings missed consensus estimates. Analysts’ consensus for the stock was a loss per share of $0.52, but that missed by a wide mark to -$1.39. Losses per share for the quarter expanded from -$0.53 year-on-year over the third quarter of 2020.
GameStop also showed a net loss of $105.4 million, a significant jump from the $18.8 million recorded in the quarter a year ago.
GME remains a popular pick for retail traders, with the stock’s massive upswing earlier in the year highlighting the power of retailers made famous by WallStreetBets, a Reddit group that sparked a staggering rally for the stock.
The stock fell 2.3% to $173.65 after the earnings report and has traded lower premarket at 4% as markets seek to bounce off recent lows amid Omicron coronavirus variant concerns. Despite the negative action, the meme stock is likely to rebound higher given its historical price movement over the past 12 months.