There are numerous stocks to mention, but GameStop Corp. (GME) is the undisputed king of the meme stock frenzy. The year 2021 has been one full of short squeezes and meme stocks. Retail investors have attempted to send stocks to the moon since the first month. r/wallstreetbets, the Reddit group has evolved into a hub for retail investors to orchestrate squeezes.
GameStop’s stock rose 1900% in a matter of days due to retail investors’ fanaticism, attracting the attention of new investors. The sudden increase in share value drew the attention of the US Securities and Exchange Commission, prompting the regulatory body to request trading activity documents.
This year, the video game retail chain took the first steps toward becoming an e-commerce retailer. In addition, it generated 396 million Google searches in 2021, surpassing Tesla as the most-searched stock of the year. With such an exciting year, GME deserves a sneak peek at its earnings, plans, and performance.
GameStop Short Squeeze and following months
At its peak, on January 28, the short squeeze caused the retailer’s stock to reach a pre-market value of more than $500 per share, nearly 30 times the $17.25 valuation at the start of the month. According to Dow Jones market data, more than 175 million shares of GameStop were traded on January 25, the second-highest total in a single day, exceeding the company’s 30-day average volume of 29.8 million shares.
After the peak in late January, the unusually high price and volatility persisted. On February 24, the GME stock price doubled in 90 minutes and then averaged around $200 per share for the next month. After earnings were released and the company announced plans for a new secondary stock offering, the GameStop stock price fell 34% to $120.34 per share on March 24. On March 25, the stock rebounded dramatically, increasing by 53%. On June 09, it again picked up, and the stock’s value was $328, representing a 1,838% year-to-date increase.
GameStop and other meme stocks captured the attention of the entire financial world between January 22 and January 29, 2021, when their stock price rose more than 1900% in a matter of days. This resulted in a congressional hearing where firms/individuals suspected of being responsible were called to testify. The SEC has been ordered to publish a report on this event by the summer of 2021.
After several delays, the SEC ultimately released the report, which flatly refuted every claim made by retail traders. The report disputes the presence of naked shorts (concerning GameStop), claims that no broker suffered liquidity issues, and acknowledges that short interest for trading security may conceivably go above 100%. The research concluded that the reason for GameStop’s rise was the coordinated actions of retail traders, not shorts covering their positions, which was the final nail in the coffin.
The most contentious aspect of the January incident was when brokers like Robinhood prohibited users from buying GameStop and other meme stocks but allowed them to cancel their positions, resulting in a significant drop afterward.
On January 28, GameStop’s entire market capitalization surpassed $33.7 billion, making it the Russell 2000 index’s highest-valued firm for the time being. Despite continuing to incur quarterly losses, GameStop’s market cap has risen to $11.753 billion.
GME stock closed trading at $153.93 on December 29, with a volume of 2.04 million shares, representing an 886% year-to-date change in value.
As of 10:45 AM on December 30, GME stocks traded at $153.76, 0.11% down since 29th.
GameStop Earnings FY2021
Revenues for GAMESTOP CORP. dropped 21.28 percent to $5.09 billion in FY 2021 compared to FY 2020. The company’s net income increased by 54.28 percent to -215.30 million dollars. GME’s stock has risen by more than 1500% year to date. In a nutshell, here’s how GameStop did in the first three-quarters of FY21:
FY21 Q1 – June 09, 2021
Gamestop’s fiscal first-quarter revenues increased by 25% as the video game retailer embarks on a turnaround strategy spurred in part by a Reddit-inspired stock spike. Matt Furlong, a former Amazon executive, has been selected as the company’s new CEO.
The stock touched a six-month high of $328 on June 09, just before the company reported its fiscal first-quarter earnings. Its lowest closing price was $146.80 on August 04 over that period. After the firm declined to provide a year-end prognosis and announced it might sell up to 5 million shares, shares plunged more than 12% in extended trading the same day.
- EPS: 45 cents per share adjusted vs. 84 cents expected
- Revenue: $1.28 billion vs. $1.16 billion expected
GameStop reported a net loss of $66.8 million, or $1.01 per share, for the quarter, compared to a loss of $165.7 million, or $2.57 per share, a year ago. The company lost 45 cents per share after accounting for things. According to Refinitiv, analysts expected GameStop to report a loss of 84 cents per share.
Total revenue increased to $1.28 billion from $1.02 billion a year ago, exceeding Wall Street’s $1.16 billion forecasts.
FY21 Q2 – September 08, 2021
The company reported a net loss of $61.6 million, or 85 cents per share, for the quarter ended July 31. In the previous fiscal year, GameStop lost $111.3 million, or $1.71 per share, and it lost 76 cents per share on an adjusted basis. Sales increased to $1.18 billion, up from $942 million the last year.
- EPS: $1.39 per share.
- Revenue: $1.30 billion.
The video game company’s net loss increased to $105.4 million, or $1.39 per share, up from $18.8 million, or 29 cents per share, a year before.
- EPS: $1.39 vs -$0.52 per share
- Revenue: $1.297 billion vs $1.2 billion expected.
From $1.00 billion a year before, total revenue increased to $1.30 billion. According to the company, sales increased as the company extended ties with manufacturers like Samsung, LG, Razer, and Vizio. In the most recent quarter, GameStop increased inventories to stay ahead of supply chain difficulties and be well-stocked for the holidays. Inventory was $1.14 billion at the end of the quarter, compared to $861 million at the same period the previous year.
GME shares plummeted roughly 4% in extended trading as the video game retailer revealed that its losses expanded in the fiscal third quarter. GameStop stock is up 825% this year as of December 08. The stock closed at $173.65, down 2.34 percent on the same day. The market capitalization of the corporation was $13.28 billion.
GameStop NFT and Web3Gamings
GameStop, a brick-and-mortar video game retailer in the United States, has struggled in recent years due to competition from digital distribution platforms and the economic impacts of the COVID-19 epidemic, which reduced the number of individuals shopping in person.
GameStop intends to create a metaverse in the same way that Facebook (now Metaverse) has expressed interest in doing so. It has job openings under its career tab for a ‘Head of Web3Gamings’ (in which the company says it’s looking for someone to “accelerate the future of gaming and commerce” based on blockchains) and a ‘Head of Web3Gamings’ (in which the company says it’s looking for someone to “accelerate the future of gaming and commerce” based on blockchains).
The video game store intends to “change the game” by developing a new NFT platform using Ethereum technology. GameStop just added an application form for developers to their NFT website. In late October, GameStop offered a plethora of NFT-platform and Web3 gaming jobs on its career portal, stoking curiosity about what the business would do and when it will do it.
Things appear to be on track for a launch shortly. “Power to the Players. Power to the creators. Power to the collectors,” this statement can be found on GameStop’s NFT website. Below the image is a link to an Ethereum-based contract address.
GameStop has hired new executives and fired others to transition from a brick-and-mortar shop to an e-commerce retailer. It appointed Ryan Cohen, a co-founder of Chewy, as chairman of its board of directors to oversee the turnaround. GameStop shook up top management by setting Matthew Furlong and Mike Recupero, both former Amazon executives, as CEO and COO. Jenna Owens, the company’s Chief Operating Officer and Executive Vice President left after a seven-month stint.
With new top leadership in place and significant initiatives in the works including the brand new NFT marketplace, it’ll be interesting to see what happens in 2022. Will GameStop be able to maintain its 2021 fame and capture the fast-paced digital world?