GameStop smashes sales estimates but shares drop on turnaround plan details

GameStop Corp on Wednesday reported a 25% jump in quarterly sales but failed to lay out fresh details about how it plans to refashion itself into a gaming and entertainment retailer.

Fresh from raising new capital and watching its share price march higher during the second quarter, GameStop executives reported that net sales, the company’s main performance metric, jumped to $1.18 billion in the three months ended July 31 from $942 million a year earlier as vaccinations encouraged people to return to its stores.

Analysts had estimated sales of $1.12 billion, according to IBES data from Refinitiv.

Despite the stronger numbers, investors reacted by pushing the shares down 7.7% in after-hours trading, complaining on the internet that the company was still not taking questions and was declining to tip its hand about future plans.

Wednesday marked the first time that GameStop’s new chief executive, Matt Furlong, spoke to investors.

Furlong, who joined in June, promised that the company’s mission was still to “delight customers” and deliver value to long-term shareholders.”

While the company has excited many retail investors with the prospects of building the leader in the video game business, which has higher revenue than the Hollywood movie industry, Furlong’s post-results conference call lasted less than 10 minutes and did not allow for questions.

He also provided no financial forecasts.

Early this year, retail investors hyped stocks including GameStop on news site Reddit and brokerage site Robinhood, a blow to several established hedge funds that bet the stocks would tumble and creating such a frenzy of fortunes made and lost that the U.S. Congress held hearings to investigate.

The quarterly results come as investors closely track chairman and top shareholder Ryan Cohen’s efforts to reinvent the company by focusing more on e-commerce while also trying to rejuvenate the physical stores after a year of pandemic-related closures.

Whether Cohen, along with his new management team, will succeed is still unclear and there were no new hints on Wednesday only weeks after Cohen said in June, “You won’t find us talking a big game, making a bunch of lofty promises, or telegraphing our strategy to the competition.”

The company’s shares fell nearly $15 or 7.4% in after-hours trading after closing the regular session at $199.16, marking a 1,052.46% increase so far this year.

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