GameStop, reported lower-than-expected earnings Tuesday but showed progress in building e-commerce sales.
The company, which currently trades at some ten times its value at the start of the year, reported fourth-quarter profits of $80.5 million, nearly four times the level in the year-ago period.
Revenues fell 3.3 percent to $2.1 billion
Both the earnings and revenues lagged analyst expectations. Shares of the volatile equity initially rallied after the report in after-hours trading, then tumbled before moving back into positive territory.
The company, which has been building up its e-commerce business as the pandemic has shuttered retail stores, said global e-commerce sales jumped 175 percent compared with the year-ago period.
Digital sales now account for more than one-third of net sales, up from a 12 percent share in the year-ago period.
GameStop said it was continuing to suspend earnings forecasts amid the uncertainty of the coronavirus pandemic.
GameStop’s unlikely rise on Wall Street in 2021 results from a frenzy of buying interest from retail investors who exchanged advice and opinions on a popular forum at the Reddit website and came to the company’s defense when it was targeted by “short sellers” betting on a fall in value.
As a further testament to the company’s following, the company’s official earnings conference call reached capacity and was unable to take additional listeners.
Analysts widely view the company’s jump in valuation this year as unmoored from its actual performance.
Still, some investors are hopeful about GameStop’s prospects given several major staffing shifts, as well as new board members committed to revamping the strategy.
Investors are keen to see the influence of activist investor Ryan Cohen, a co-founder of online pet products shop Chewy who joined the board earlier this year.
On Tuesday, the company announced that Jenna Owens had joined GameStop as chief operating officer after earlier executive stints at Amazon and Google.
Executives did not take questions from analysts during the conference call, where Chief Executive George Sherman said he is focused on “transforming into a customer obsessed technology company that delights gamers.”
