GameStop Corp (NYSE:GME) shares fell in pre-market trading in New York on Wednesday after the video game retailer fell short of estimates with its fourth quarter earnings.
The firm, which rose to prominence earlier this year as its share price rocketed amid a frenzy of buying activity by retail traders sparked by the Reddit forum r/wallstreetbets, reported net income of US$80.5mln for the three months to the end of January, up from US$21mln a year ago, while net sales fell to US$2.12bn from US$2.19bn. Despite the income rise, both figures fell short of analyst estimates.
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Sales were boosted by a 175% surge in the ecommerce division as the closure of the firm’s retail stores during the pandemic drove customers online, however even this was not enough to satisfy analysts.
The results will present a challenge for GameStop’s turnaround effort, which is aiming to shift the business more fully online and is cited by some as the underlying reason for the Reddit-inspired rally in January, which then evolved into a struggle between retail traders and Wall Street hedge funds betting against the firm through short selling.
Another spanner in the works may be the resignation of the firm’s chief customer officer, Frank Hamlin, who earlier on Tuesday said he will step down at the end of March following close behind the firm’s chief financial officer Jim Bell.
However, the somewhat lacklustre results seemed to have taken the shine off the stock for many traders looking for it to head 'to the Moon', with the shares trading down 10.2% at US$163.20 in pre-market deals.