GameStop (GME) missed Q4 estimates however reported robust comp gross sales in early Q1, minimize its debt, and named a brand new COO. GME inventory tumbled after disclosing a potential secondary inventory providing.

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GameStop Earnings

EPS rose 5.5% to $1.34, under views for $1.46, as income fell 3.3% to $2.12 billion vs. views for a 2.2% improve to $2.24 billion. Same-store gross sales grew 6.5%, lacking consensus estimates of 8.1%. But comps in early Q1 are surging.

“We are off to a strong start in 2021 as February comparable store sales increased 23%, led by continued strength in global hardware sales,” mentioned CEO George Sherman mentioned in a press release.

Global e-commerce gross sales soared 175% in Q4. Gross margin shrank to 21.1% from 27.2% a 12 months in the past resulting from a shift towards lower-margin consoles amid the launch of latest consoles, elevated freight and bank card charges from e-commerce gross sales, and broader promotions.

Overall debt was decreased by $57 million, and the corporate had $635 million in money, up from $513.5 million a 12 months in the past. But GameStop revealed in a separate submitting that it is contemplating the sale of extra shares.

After the earnings report, administration held a convention name for simply 20 minutes with out saying a lot that was new — and did not take any questions.

The firm additionally named Jenna Owens as COO. She beforehand labored because the director of distribution and achievement at Amazon (AMZN) with stints at Alphabet’s (GOOGL) Google and Honeywell (HON).

Earlier Tuesday, GameStop introduced that Frank Hamlin, its chief buyer officer, will step down on March 31. Last month, Jim Bell, GameStop’s chief monetary officer, introduced he was leaving the corporate on March 26.

The departures come as activist investor and Chewy.com (CHWY) co-founder Ryan Cohen pushes for GameStop to revamp its enterprise mannequin and add extra choices on-line.

Stock: Shares collapsed 33.8% to shut at 120.34 on the stock market today. GME inventory soared as excessive as 483 in late January however tumbled in February earlier than rebounding barely and falling once more this month. GameStop inventory is again under its 50-day, in keeping with MarketSmith chart analysis.

Among different shares within the Reddit rally, AMC Networks (AMC) misplaced 15.4% Wednesday, and Discovery (DISCA) dropped 13.6%.

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GME Stock Short Squeeze Frenzy

GameStop discovered itself in the midst of a short-squeeze mania introduced on by the Reddit group r/wallstreetbets, which regarded to tackle hedge funds who guess that the inventory would fall.

A House Financial Services Committee grilled officers in February concerning the relationship between the Robinhood buying and selling app and Wall Street, after the app positioned restrictions on the GME inventory and different Reddit short-squeezed shares.

The short-squeeze could possibly be working out of juice. An S&P Global Market Intelligence report confirmed that short-selling total fell in late February with short-selling in GameStop stock tumbling greater than 80%. The investing technique by r/wallstreetbets wants closely shorted shares for fast positive factors.

Follow Gillian Rich on Twitter for investing information and extra.

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