Video game retailer GameStop Corp
Here are the key earnings estimates, what analysts are expecting and the important factors to keep an eye on.
Earnings Estimates: Analysts expect GameStop to report second-quarter revenue of $1.14 billion, according to data from Benzinga Pro.
The company reported $1.14 billion in revenue in last year's second quarter and saw revenue of $1.24 billion in the first quarter of the current fiscal year.
GameStop has missed revenue estimates from analysts in three of the last four quarters, and has beaten revenue estimates from analysts in six of the last nine quarters.
Analysts expect GameStop to report a loss of 14 cents per share in the second quarter. The company reported a loss of 35 cents in the second quarter last year and reported a loss of 14 cents per share in the first quarter of the current fiscal year.
GameStop has missed earnings per share estimates from analysts in six of the last eight quarters.
The video game retailer missed both revenue and earnings per share estimates in the first quarter reported earlier this year.
Analyst Predicts Downside: Despite GameStop shares being down over 30% in the last year, one analyst sees the potential for more downside.
GameStop could report revenue ahead of estimates in the second quarter, Wedbush analyst Michael Pachter said, but noted that several factors may have impacted the company in the short term.
"GameStop appears to have lost market share in recent quarters," Pachter said.
The analyst, who has an Underperform rating and a price target of $6.20, said Microsoft hardware sales have been underwhelming and other factors could hurt GameStop over the long run.
"The ongoing digital mix shift is impacting new and pre-owned software sales, and the collectibles business faces a challenging comparison following a weak Q1."
Pachter said that GameStop has limited options as the software industry experiences downturns, which will subsequently affect profit margins.
"A net cash balance of around $1.3 billion should help it to remain solvent for the foreseeable future, but the long-term headwinds will likely result in cash burn growth."
Key Items to Watch: GameStop mentioned restructuring costs of $14.5 million related to its European operations in the first quarter. The company said it expected more transition charges in the second quarter, which will be something investors and analysts will be closely watching.
The company has gone through several personnel changes in 2023, which will also likely be a key development for investors and analysts to watch.
Earlier this year, Matt Furlong stepped down as the CEO of GameStop. His resignation was said to be amicable, with no disagreements cited between him and the company.
On another front, GameStop announced that activist investor Ryan Cohen had been elected as the executive chairman. Cohen, who holds a 13% stake in the video game retailer, had previously been named the company's chairman.
In July, GameStop announced that its Chief Financial Officer Diana Saadeh-Jajeh was resigning from the role in August. Saadeh-Jajah had served as the CFO of the company since July 2022 and held previous roles within the organization prior to that.
Analysts and investors will be looking forward to an update regarding the company's search for new leadership.
GameStop announced it would not host a first-quarter conference call. Investors and analysts will likely expect a conference call to happen after the second quarter financial results.
GME Price Action: GameStop shares trade at $19.05 versus a 52-week trading range of $15.41 to $34.98. Shares of GameStop are up over 10% year-to-date in 2023.
