Ugh, this is so dumb. GameStop today announced results for its third fiscal quarter ended Feb. 1 that included a fiscal second-quarter loss of $32.8 million, or 21 cents per share, on revenue of $2.57 billion.
Last year’s $115 million profit, on revenue of $3.6 billion, was GameStop’s fifth straight year of declining net income. And while the stores still are a destination for people buying or trading video games, they are now besieged by the growing presence of online competitors like Amazon and the video game downloading app Steam.
And while some traditional brick-and-mortar sellers face tougher competition from online, others, like GameStop, are struggling to adapt.
So the analysts at Baird and Wedbush Securities started talking to investors about the decline. And GameStop stock did go up today. What gives?
The analysts explained that investors “may be taking advantage of a short-term technical bounce.” Here’s their reasoning.
Baird and Wedbush were a bit skeptical. Baird said its “initial analysis shows an oversold condition with shares re-testing prior lows.” Wedbush took it a step further, describing the article as “factually incorrect.”
“Disingenuous and inaccurate @Wedbush article declaring jnb dead on the day preannounced a loss. False!” @GameStop responded, in a tweet that garnered over 1,000 likes and more than 500 retweets.
Baird responded by pointing out that GameStop earned $23 million more in revenue for every 1% decline in sales. And they didn’t close their case off with this: “Maybe TDs much more like comedy,” they wrote.
“Nice try GameStop,” the analysts responded, in a tweet that gained over 13,000 likes and almost as many retweets.
Get a script, @GameStop. https://t.co/mCk7yXP05t — Wedbush Securities (@WedbushSec) March 2, 2017
Earlier this year, video game industry publication MCV reported on a somewhat similar story. On Jan. 31, a “broader than expected decline in new software” showed “the sector on the slide.” Citing industry association NPD, they wrote: “The NPD Group has warned that video game hardware is stagnating while it is being superseded by mobile gaming.”
In the end, GameStop’s stock rose by a single percent on Wednesday — they’re still down 30 percent since the start of this year.
How about you? What would you do with GameStop?
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