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GameStop Stock Slumps After Wider-Than-Expected Second Quarter Loss

GameStop generated $1.183 billion in second quarter revenues, but still wasn't able to lift its bottom line into the black.

GameStop  (GME) - Get GameStop Corp. Class A Report posted a wider-than-expected second quarter loss Wednesday, but topped Street sales forecasts as brick-and-mortar stores saw increased traffic as pandemic restrictions around the country eased. 

GameStop said its adjusted loss for the three months ending on July 31 was pegged at 76 per share, narrowing from a loss of $1.42 per share over the same period last year but wider than the Street consensus forecast of -66 cents per share. GameStop's reported loss was 85 cents per share. Group revenues, GameStop said, rose 25.6% from last year to $1.183 billion, topping analysts estimates of $1.12 billion.

During the second quarter of 2021, most of our stores in all jurisdictions returned to normal operations," GameStop said in a Securities & Exchange Commission filing. "However, with the resurgence of COVID-19 cases due to variants, we experienced some temporary closures in our Australian segment prior to the end of the second quarter of 2021.

"While the gaming industry has not been as severely impacted by the COVID-19 pandemic as certain other consumer businesses, store closures during the stay-at-home orders in certain countries continue to adversely impact our results of operations during the six months ended July 31, 2021," GameStop added. "In light of our strengthened balance sheet, we project that we will have adequate liquidity for the next 12 months and the foreseeable future to maintain normal operations."

GameStop shares were marked 8.1% lower in extended hours trading immediately following the earnings release to indicate a Thursday opening bell price of $182.75 each. 

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That would still leave the stock with a year-to-date gain of around 1,000% and a market value of just under $14 billion.

GameStop raised around $1.12 billion in late June through the sale of 5 million common shares in an "at-the-market' offering amid at capitalizing on the stock's meteoric rise. 

GameStop said the sale, first unveiled amid its first quarter earnings release on June 9, will be used for "general corporate purposes as well as for investing in growth initiatives and maintaining a strong balance sheet."

Data from the Yolosocks.live website, which tracks real-time mentions on stocks within Reddit's r/wallstreetbets chatroom, indicates that GameStop is the second most-discussed stock among users with more than 1,500 mentions over the past 24 hours.

Short interest in the shares remains elevated, however, with data from S3 Partners showing just over $1.44 billion in bets against the group, a figure that represents around 6.7 million shares, or 10.7% of the outstanding float.