TLDR
- GameStop stock down 27% year-to-date ahead of Q2 earnings report on September 9
- Wall Street expects earnings of $0.19 per share and revenue of $900 million for Q2
- Q1 showed profit surprise of $0.17 per share but revenue dropped 17% to $732.4 million
- Company insider Daniel Moore sold 830 shares worth $18,824 on September 3
- Wedbush analyst maintains Sell rating with $13.50 price target, seeing 40% downside
GameStop shares have struggled this year, dropping 27% as the video game retailer prepares to report second-quarter results on September 9. The meme stock faces questions about its retail business performance and how it plans to use its massive cash reserves.
Wall Street analysts expect the company to post earnings of $0.19 per share for Q2. This compares to just $0.01 per share in the same quarter last year. Revenue is forecast to climb 13% to $900 million, according to TipRanks data.
The earnings report comes after a mixed first quarter that showed both strengths and weaknesses. GameStop surprised investors with earnings of $0.17 per share, crushing Wall Street’s $0.04 estimate. The company also swung to a $44.8 million net profit from a loss in the prior year.
But revenue told a different story. Sales fell 17% year-over-year to $732.4 million, missing the $754.2 million that analysts expected. The drop reflected ongoing weakness in GameStop’s core video game hardware and software segments.
Cash Position Remains Strong
One area where GameStop continues to shine is its balance sheet. The company ended Q1 with $6.4 billion in cash, giving it financial flexibility as it works to transform its business model.
The collectibles segment provided a rare bright spot, growing 54% to $211.5 million in the quarter. This growth helped offset some of the declines in traditional gaming products.
Recent insider activity shows some selling pressure. Daniel William Moore, who serves as the company’s PFO and PAO, sold 830 shares worth $18,824 on September 3. While the transaction was relatively small, it adds to concerns about the stock’s near-term prospects.
Analyst Sentiment Remains Bearish
Few Wall Street analysts still cover GameStop due to its volatile trading patterns and meme stock status. Alicia Reese of Wedbush maintains one of the few active ratings on the stock with a Sell recommendation.
Reese has set a price target of $13.50 per share, which implies more than 40% downside from current levels. Her bearish stance reflects concerns about the company’s retail business struggles and questions about its long-term strategy.
TipRanks’ AI analyst Spark rates the stock as Neutral. The system notes GameStop’s strong balance sheet and recent corporate events as positives but points to valuation concerns and technical weakness as negatives.
The stock currently trades with an average daily volume of 12.3 million shares. Its market cap sits at $10.02 billion, down from higher levels earlier this year.
GameStop’s technical indicators flash a Sell signal, reflecting the stock’s recent underperformance. The 23.65% year-to-date decline has disappointed investors who hoped for better results from the company’s transformation efforts.
Data from Main Street Research shows GameStop’s Hardware and Accessories segment has been trending downward in recent quarters. This decline has pressured overall revenue growth despite improvements in other areas like collectibles.
The September 9 earnings report will provide fresh insight into whether GameStop can stabilize its core business while growing newer segments. Investors will also look for updates on how the company plans to deploy its large cash position.
