GameStop shares fall as video game retailer faces competition, weak spending
Reuters
Published Mar 27, 2024 08:12AM ET
Updated Mar 27, 2024 03:11PM ET
(Reuters) -GameStop's shares fell more than 14% on Wednesday, as the brick-and-mortar video game retailer reported a decline in fourth-quarter revenue on the back of a spending slowdown and rising competition from e-commerce firms.
The Grapevine, Texas-based company also said late on Tuesday that it had cut an unspecified number of jobs, joining Japan's Sony (NYSE:SONY) and Electronic Arts (NASDAQ:EA) in a bid to reduce costs as economic uncertainty hits discretionary spending.
GameStop (NYSE:GME) is set to lose more than $700 million in its market capitalization if the losses hold.
As of Tuesday, GameStop's stock had fallen nearly 12% this year, as the retail and ecommerce environment remains intensely competitive for the company, which was once a mainstay of American malls.
The company has a total of 4,169 stores as of Feb. 3, compared with 4,413 in January last year.
GameStop was hailed as the pioneer of Wall Street's so-called meme stocks. The stock's price rose as much as 100 times over several months in 2021, largely on the sentiment of individual buyers connected through the Reddit community forum WallStreetBets.
"No sooner has the meme stock craze been resurrected by Donald Trump's media company enjoying a big share price boost, it's somewhat ironic that the grandfather of meme has fallen flat on its face," AJ Bell investment director Russ Mould said.
Shares of Trump Media & Technology Group rose more than 12% on Wednesday, a day after its stellar Nasdaq debut.
Mould added that the lack of detailed commentary about trading and the company's decision not to hold a post-earnings conference call means "the management is hiding under a rock."
GameStop's first adjusted per share profit in four quarters also failed to lift investors' spirits. The company's earnings were 22 cents per share on an adjusted basis for the fourth quarter ended Feb. 3, after breaking-even in the third quarter.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.