GameStop Corp (NYSE:GME) is a business that’s been in rough shape over the past couple of years. The company’s incurred a loss in seven of its last 10 quarterly results. And in its most earnings report, sales of $942 million were down 26.7% from the prior-year period.
In 2019, its share price fell by 52%.
However, in 2020, amid the pandemic, the stock’s found some momentum of late and it’s up over 54% year to date. The stock jumped in late August after investors learned that venture capital firm RC Ventures purchased shares in GameStop and would own a 9% stake in the business.
It’s a good sign that the company is attracting big investors as it signals that all hope may not be lost for GameStop.
When the company released its most recent quarterly results, there was another bright spot for GameStop: its online sales. Although revenue was unimpressive, the company’s e-commerce sales rose 800% during the period and made up one-fifth of its net sales. The big question for investors is if this was an anomaly due to COVID-19 and if GameStop can build on these results, which could help improve its margins and profitability.
Another reason why the company may do better next quarter is that with new consoles out, its sales could get a boost. The new PlayStation and Xbox consoles are available for pre-order at GameStop and they will help drive lots of sales heading into the holiday season.
GameStop’s business isn’t dead just yet, but that doesn’t mean investors should buy up the stock based on short-term trends, either. While it may be tempting to buy into this recent bullishness, investors are better off waiting to see how GameStop does in future periods as there are still many question marks surrounding its growth and profitability.
For now, this is a stock you’ll probably want to just keep on your watchlist.
