Gamestop’s second 2024 quarter results are out, and it’s more of the same bitter truth.The retailer’s net sales dropped from $882 million in Q1 to $798 million— an $84 million decrease.
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Plummeting sales notwithstanding,Q2 resulted ina profit of$14.8 million, a stark difference from last year’s loss of $2.8 million. In itsquarterly financial report,Gamestopannouncedthe closure of “underperforming stores” to increase efficiency.
In classic corporate legalese, the report outlined theirplan to “Establish Omnichannel Retail Excellence,” “Achieve Profitability,” and “Leverage Brand Equity to Support Growth.”
Basically, they’re promising to make money.It’s unclear how that’ll happen, as the company doesn’t have the “strong household brand recognition” it once had, nor “a significant store network” as more close down by the day.
Decreasing the store credit people can get for aPS5right afterSony said it expects players to do thatfor thenew PS5 Proisn’t bringing in new customers, that’s for sure.
Analysts from Wedbush, a leading Los Angeles investment firm,havewarned that Gamestop’ssituationwill only get worse.
There is no sugarcoating the facts. The once-great gaming giant is on its last breath. In fact,it announced the sale of20 million sharesearlier this week. In its bid to get some quick cash,Gamestopsent itsalready struggling stock down by 10%.But this is more of a habit than an outlier.
Back in May, Gamestopsold 45 million shares for $993.4 million. It doesn’t take an economist to figure out that this might be a last-ditch effort to cover losses; Wedbush’s analysts quickly highlighted these sales in their statement.
It would be just as reasonable for management to close all its stores and operate as a bank.
-Wedbush Analyst
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Unsurprisingly, Wedbush analysts attributed Gamestop’s continued failure to poor management and an inability to catch up with the times; this is perhaps the understatement of the decade.
We have yet to see any strategy (from Gamestop’s management)
When most video games are sold digitally through console online stores, Gamestop still has costly brick-and-mortar stores.Although they dooffer digital codesfor games,why would a customer go through a third party and more steps? Simply log into Steam, or the PS/Xbox store.
The advent of the modern internet rendered Gamestop the gaming equivalent of Blockbuster. Adeteriorating reputation amongst gamersand employees, an opportunistic credit system, and an outdated business model have all contributed to this giant’s descent.
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Remember when it was kind to rewind?
This fall from grace was ultimatelymarked by the last time investing inGamestop was profitable, 2021.
In 2021, hedge funds tried to short-sell Gamestop stock.For non-finance bros, they would borrow shares, then immediately sell them, hoping they could buy them back at a lower price.
Their plans were thwarted when Reddit users fromr/wallstreetbets mass-bought the stock, forcing the hedge funds to buy them at $483 a share— the original price was $17.This created millionaires out of everyday Joes while tearing through the wallets out of Wall Street bros.
Brokerages then froze trading, which was alleged to be market manipulation, and stopped Gamestop’s 15 minutes of fame.
This incident later helped Gamestop sell 5 million shares the same year for$1.1 billion.
Where Gamestop goes from here is uncertain.But at some point, they’ll run out of stores to close and shares to sell. When that happens, stakeholders will come knocking on closed doors.
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