GameStop (GME), a WallStreetBets favorite and phenomena of the year, is set to report fourth quarter and fiscal year 2020 results Tuesday afternoon. The stock was trading about 5% lower by mid-session on Tuesday.
These are the consensus Wall Street analyst estimates for the fourth quarter, according to Bloomberg:
Revenue: $2.21 billion expected
Adjusted earnings: $1.43 per share estimate
Adjusted net income: $106.9 million estimate
GameStop announced the departure of its Chief Customer Officer ahead of earnings today. This marks another major c-suite move since activist investor and Chewy (CHWY) co-founder Ryan Cohen joined the board of directors after accruing a 13% stake in the company.
A pivot to digital and tech is what the future seems to hold for the struggling brick-and-mortar video game seller, with major announcements over the last few months serving as catalysts for the stock’s rising price and increased retail investor speculation from the likes of Reddit’s WallStreetBets.
In early February the company announced Matt Francis, a former engineering leader from Amazon Web Services, would come on board as its first-ever chief technology officer. GameStop also announced its Chief Financial Officer Jim Bell would be resigning — news which sent the stock soaring more than double at the time.
Wall Street analysts have highlighted shares of the video game retailer have been trading detached from fundamentals. Currently the stock has no analyst Buy rating, 4 Holds, and 3 Sells, according to Bloomberg data.
GameStop was the target of a massive short squeeze by retail investors in January when shares peaked at $483 intraday on January 28. The stock has since been on a volatile ride but still up more than 870% year-to-date as of Tuesday morning, hovering at around $185/a share.
During Tuesday’s conference call, analysts and retail investors will be paying close attention to commentary about the major digital/tech pivot happening at GameStop since Cohen hopped on the board, and how that may translate into higher sales and a growing bottom line.
Analysts may also ask why the company hasn’t raised money through a stock offering when shares have been so high, though it’s unclear management will want to comment on the short squeeze frenzy at all. So far GameStop executives have been tight lipped about it.
The January short squeeze prompted hearings on Capitol Hill and increased scrutiny into the trading platform RobinHood, which temporarily restricted buying GameStop and other heavily shorted stocks.
Much of the focus has also turned to the rise of retail investors and influence of online forums. Keith Gill — the user known as “Roaring Kitty” on Youtube, told the House Financial Services Committee in February that he believed GameStop can pivot toward a technology-driven business, and”by embracing the digital economy, GameStop may be able to find new revenue streams that vastly exceed the value of its business.”
As for the worldwide attention on the stock, data from Placer.ai indicates the GameStop phenomena may be correlated with an upward trend in foot traffic at the retailer in recent months.
“The week of December 28th, for instance, visitor counts were down almost 18% year-over-year. But as of the beginning of March, they were only down around 4%,” according to Placer.ai.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre