GameStop (NYSE:GME) is a video game retailer that has struggled in recent years as consumers flock to digital channels. The COVID-19 pandemic brought more devastation to traditional brick-and-mortar retail. However, an attempted short squeeze from a gaggle of passionate reddit users attracted a flock of retail investors. Shares of GameStop have climbed over 950% in 2021 as of close on March 23.
The company released its final batch of 2020 results yesterday. Comparable store sales rose 6.5% from the prior year while net sales were down. GameStop suffered a 12% decrease in the store base as the company pursues strategic de-densification. However, global e-commerce sales jumped 175% from the prior year. This represented 34% of net sales in Q4 2020 compared to 12% of net sales in the previous year.
If GameStop is to turn its market success into real-world success, it needs to make waves in the e-commerce space. The video game market is due for big growth over the course of the 2020s. GameStop has the name recognition, the enthusiasm, and exciting new leadership.
Ryan Cohen, the co-founder and former CEO of Chewy (NYSE:CHWY), is serving on the GameStop board of directors. He has loudly pushed for its aggressive foray into e-commerce.
GameStop has a long way to go to live up to the hype it has generated in 2021 so far. Some have suggested that a big acquisition in the e-commerce space could be on tap in the months ahead. The stock is way too risky for me at this stage. However, investors with a stronger stomach for risk may want to consider riding the wave at GameStop as we move into the spring.
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