By Reuters | Updated: March 28, 2024
March 27 (Reuters) – GameStop’s (GME.N) shares fell more than 14% on Wednesday, as the brick-and-mortar video game retailer reported a decline in fourth-quarter revenue on the back of a spending slowdown and rising competition from e-commerce firms.
The Grapevine, Texas-based company also said late on Tuesday that it had cut an unspecified number of jobs, joining Japan’s Sony (6758.T) and Electronic Arts (EA.O) in a bid to reduce costs as economic uncertainty hits discretionary spending.
GameStop is set to lose more than $700 million in its market capitalization if the losses hold.
As of Tuesday, GameStop’s stock had fallen nearly 12% this year, as the retail and ecommerce environment remains intensely competitive for the company, which was once a mainstay of American malls.
The company has a total of 4,169 stores as of Feb. 3, compared with 4,413 in January last year.
GameStop was hailed as the pioneer of Wall Street’s so-called meme stocks. The stock’s price rose as much as 100 times over several months in 2021, largely on the sentiment of individual buyers connected through the Reddit (RDDT.N), community forum WallStreetBets.
“No sooner has the meme stock craze been resurrected by Donald Trump’s media company enjoying a big share price boost, it’s somewhat ironic that the grandfather of meme has fallen flat on its face,” AJ Bell investment director Russ Mould said.
Shares of Trump Media & Technology Group (DJT.O), rose more than 12% on Wednesday, a day after its stellar Nasdaq debut.
Mould added that the lack of detailed commentary about trading and the company’s decision not to hold a post-earnings conference call means “the management is hiding under a rock.”
GameStop’s first adjusted per share profit in four quarters also failed to lift investors’ spirits. The company’s earnings were 22 cents per share on an adjusted basis for the fourth quarter ended Feb. 3, after breaking-even in the third quarter.
© Thomson Reuters 2024
