GameStop is one of the famous meme promotions. The company works in the field of video content. However, the company is not only, or rather, not so much a seller of video games, it produces video game equipment, software for physical and digital video games, and accessories for them. The products are sold through a network of retail stores located geographically in different countries – in America, Australia, and Europe.
The brand is quite popular, but in the professional aspect only a small circle of specialists remembers about it, but as a meme promotion – millions. For several years in a row, the shares of this enterprise declined in value, and in less than a couple of years, the company would have disappeared from the horizon altogether. The situation was saved by retail investors who decided to buy out and keep assets afloat.
As a result, the paper sharply jumped up, and managed to rise by 1165% in the shortest period of time. This happened against the background of the deterioration of all other indicators, which have been systematically sliding downhill in recent years. After a long fall, the company's shares are growing today. However, how long will this dynamic last? Experts say that the direction of the price depends on the report for the 2nd quarter.
What do they do to keep afloat?
Most merchants acquire GameStop assets remembering past achievements, believing that the company still has serious potential. Today, this paper is positioned around $215 per unit, but this situation has not always been. Its cost was constantly falling. For example, in 2019 – $6.59, in 2020 – $5.38, in 2021 – $3.31.
We conclude that the issuer's shares are currently worth 60 times higher than their recent values. This is not a bit surprising, many enterprises operate on the stock exchange with similar indicators of the price-to-profit ratio. The value of assets has grown in the wake of the HYPE raised around the company in 2021. However, the company is unlikely to show decent results further. This is due to the fact that digital products are more preferred in the gaming industry today, and the company mainly specializes in the production of physical disks.
The company mainly clings to avid players who prefer to play from standard media. After completing the game, they sell the disk and the company itself becomes the buyer. This scheme works the way the manufacturer sells digital versions at the same price as physical ones, only there are no bonuses here, and you don't even need to go to the store. This trend is unlikely to change in the coming years, and while GameStop follows its principles, it will not be able to escape from the red zone.
How the company operates during a period of respite
The rapid rise in prices allowed the management to attract funds from the stock market to repay the debt. In April, the company sold 3.5 million shares worth $551 million and announced the repayment of its bonds with a yield of 10% in the amount of $216.4 million.
The company completed the financial year with a cash reserve in the amount of $635 million, which, according to the management, served as an excellent platform for starting a digital transformation from a retail enterprise into an e-commerce concern.
It is also worth noting that GameStop is currently re-electing the management team, or rather, its complete replacement. Almost all top managers are leaving the company, and Sherman left the post of CEO in July of this year. Most of the directors simply did not put forward their candidacies for re-election.
So, the old leadership was replaced by a new one in the composition:
- CEO - Matt Furlong;
- The CFO is Mike Recupero, who, like Furlong, came from Amazon;
- The chairman of the board of directors is Ryan Cohen, who is the largest investor and part – time co-founder of the company.
The latter for many years convinced the company of the unprofitability of maintaining retail outlets that do not bring any income. He also called for focusing on sales in the field of e-commerce.
Last year, GameStop retail outlets were completely closed in Denmark, Finland, Norway and Sweden, which had a positive impact on the company's annual financial report.
The financial situation
According to the results of the first quarter of this year:
- net sales-an increase of 25.1% ($1.277 billion, last year - 1.021 billion);
- reduction of net loss by 2.5 times – 66.8 million;
- reduction of adjusted loss from $2.44 to $0.45 per asset;
- expenses – 370.3 million, which is 16.2 million less than last year;
- the operating loss is 40.8 million, as of last year – 108 million.
Immediately after the meeting held on June 9, during which the management was changed, the company's shares went down and fell by as much as 13%. Now they cost $263.02 per unit. Investors were also greatly disappointed by the lack of a forecast for at least the nearest period.
What to do with GameStop assets?
The high dynamics of the asset price does not leave any possibility for making more or less realistic forecasts. Experts are sure that extreme volatility will be observed in the market for some time and this will give traders the opportunity to earn, well, or lose.
Regarding the reviews for the past week
Despite the rosy forecasts, Zoom Video Communications Inc. somewhat disappointed its investors. Its profit is $1 billion, and the growth at the same time is 663.5 million. Immediately after the release of the report, the shares fell in price to $300 per unit. The company explains this dynamic by removing coronavirus restrictions.
The company's revenues have grown much more, more than 4 times. The profit reached 317 million, which is much higher than last year's figure of 186 million. Zoom also reports an increase in regular customers. If last year at this time there were 497 thousand of them, this year there are 504.9 thousand. This state of affairs with assets may not last long. Experts recommend entering into transactions from the $350 mark per asset unit.
Read more: SEC: US Securities and Exchange Commission