- GameStop (NYSE:GME), the original meme stock, reported a profit for Q3 2024, despite a significant drop in sales
- GameStop posted sales of US$860 million, a 20 per cent decline from US$1.078 billion in the same period last year
- GameStop’s financial position has also improved, with cash, cash equivalents, and marketable securities totaling US$4.616 billion at the end of the quarter, a substantial increase from US$929.2 million a year ago
- GameStop Corp. (NYSE:GME) last traded at US$26.93
In a surprising turn of events, GameStop (NYSE:GME), the original meme stock, reported a profit for Q3 2024, despite a significant drop in sales. The videogame retailer has been aggressively implementing cost-saving strategies, including closing stores and focusing on higher-margin products.
For the quarter ending in October, GameStop posted sales of US$860 million, a 20 per cent decline from US$1.078 billion in the same period last year. This figure fell short of the US$888 million average estimate from analysts surveyed by FactSet. However, the company managed to swing to a profit, earning US$17.4 million, or 4 cents per share, compared to a loss of US$3.1 million, or 1 cent per share, in the previous year’s quarter.
GameStop’s financial position has also improved, with cash, cash equivalents, and marketable securities totaling US$4.616 billion at the end of the quarter, a substantial increase from US$929.2 million a year ago. This boost was partly due to the completion of an “at-the-market” equity offering, which raised approximately US$400 million through the sale of 20 million shares.
The company has stated that it does not plan any further equity offerings for the remainder of the fiscal year. GameStop’s shares have surged 53.6 per cent in 2024, buoyed by the return of influential trader Keith Gill, also known as Roaring Kitty, to social media. In contrast, the S&P 500 index has risen by 26.5 per cent this year.
Despite the positive earnings, GameStop continues to face challenges. The company is struggling to revitalize its core business amid stiff competition from online giants like Amazon and eBay.
The broader economic environment remains uncertain, with consumers cutting back on discretionary spending due to persistent inflation and a sluggish recovery in the gaming market.
GameStop’s efforts to streamline operations and focus on profitability appear to be paying off, but the company will need to navigate ongoing market pressures to sustain its turnaround.
GameStop Corp. is a U.S. video game, consumer electronics and services retailer. The company operates across Europe, Canada, Australia and the United States. It sells new and second-hand video game hardware, physical and digital video game software, and video game accessories.
GameStop Corp. (NYSE:GME) last traded at US$26.93, and has risen 53.62 per cent since the year began.
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(Top photo of GameStop storefront: GameStop)
