GameStop Post Surprise Q3 Profit Despite Falling Sales: Stock Rises But Retail Sentiment Remains Sour

GameStop Corp. ($GME) stock rose in Wednesday’s premarket session after the video-game retailer reported mixed results for its fiscal year 2024 third quarter but retail sentiment remained downbeat.

Grapevine, Texas-based GameStop reported third-quarter earnings per share (EPS) of $0.04, compared to the year ago's break-even results and the consensus estimate for a loss of $0.03 per share.

Net sales fell 20.22% year-over-year (YoY) to $860.3 million, which was below the consensus estimate of $887.68 million. Hardware sales declined about 28% to $417.4 million and software sales were down a more modest 15% to $271.8 million. 

Cost of sales fell 24% YoY and selling, general & administrative expenses declined 8.7%. The company reported an interest income of $54.2 million, higher than $14.7 million a year ago. 

Ahead of the third quarter print, Wedbush analyst Michael Pachter said GameStop will benefit from stable industry sales but will be hampered by the ongoing mix shift to digital.

The company ended the quarter with a cash balance of $4.616 billion.

During the third quarter, GameStop raised gross proceeds of $400 million by selling 20 million of its common stock in an “at-the-market” equity offering program. 

While the company has stopped providing formal sales and earnings guidance from 2019, Pachter sees 2024 EPS and revenue at $0.01 and $4.03 billion, respectively.

GameStop was among the most active tickers on Stocktwits early Wednesday.

GME sentiment and message volume December 11, 2024, premarket as of 6:18 am ET | Source: Stocktwits

On Stocktwits, sentiment toward GameStop stock remained bearish (38/100), although message volume improved from ‘normal’ to ‘high.’

Some users expressed unhappiness with the company's failure to deploy its cash reserves and preferred the company invest in gold rather than T-bills.

Some harbored hopes that GameStop would report its most profitable fourth quarter in about 10 years.

In premarket trading, as of 6:18 a.m. ET, GameStop stock climbed 2.93% to $27.72. The stock has gained about 54% for the year. 

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