GameStop reported $1.18 billion in net sales for the second quarter, up from $942 million in 2020, and $1.78 billion in cash and restricted cash at the end of July on Wednesday. The company also reported a loss of 85 cents per share, and its conference call lasted approximately 7 minutes due to management’s refusal to take questions.
The company’s stock was under pressure in early trading. However, the stock is still trading more than $100 higher than it was prior to the Reddit-fueled short squeeze that captivated the investing world earlier this year. Because of the stock’s wild swings, several Wall Street firms have dropped coverage of GameStop, and those that remain are cautious or bearish on the company’s prospects.
Despite the fact that GameStop Chairman Ryan Cohen has pushed for the company to pivot to become more of an e-commerce company, the retailer has provided little information about its strategy, which has continued with the most recent earnings report. Loop Capital’s Anthony Chukumba said that GameStop’s earnings call was “shameful” because it was “short and detail-light.”
Colin Sebastian, a Baird analyst who does not rate the stock, stated in a note that the lack of clarity surrounding the company’s revenue plans is a concern, but that the rough plan may be coming into view with its new warehouse facilities.
“The answer may very well be yes for investors wondering if GameStop is creating a slimmer, more e-commerce-oriented version of Best Buy,” according to the Baird note.
According to Michael Pachter of Wedbush Securities, the company is “well-positioned to be a primary beneficiary of the new console launches, and we remain quite optimistic that it will return to profitability by FY:21.” However, he stated in a note that there is “still no strategy” for a long-term turnaround and that the stock price is still too high and unrelated to fundamentals.
Infrastructure investments and new hires, according to Jefferies analyst Stephanie Wissink, who has a hold rating on the stock, are key things to watch going forward as investors try to learn more about the turnaround plan. Wissink also mentioned that Gamestop could expand into the thriving NFT market.
Shares of GameStop have risen more than 900 percent year to date, and Cohen — who previously cofounded Chewy — has hired several executives with e-commerce experience to help the company transition to the digital era. This year, the company has raised more than $1.6 billion through stock sales.
“GameStop offers you nothing” at this point, Cramer said on “Squawk Box” the morning after the video game retailer reported a year-over-year decrease in its second-quarter loss.
During Wednesday evening’s call, GameStop — the original meme stock, whose shares were still up nearly 900 percent in 2021 — did not provide an outlook for the coming quarters or take questions.
On Thursday morning, the stock fell about 7%.
According to Cramer, the company does not appear to have a plan in place to carry out chairman and investor Ryan Cohen’s push to transform the video game retailer into a more digital-first operation. This year, GameStop has raised more than $1.6 billion in stock sales as a result of the Reddit-fueled short squeeze that began earlier this year.
The “Mad Money” host echoed Loop Capital’s Anthony Chukumba, who said GameStop’s lack of details was “shameful” earlier on “Squawk Box.” “Sell the stock, ask questions later,” Chukumba added.
They were not alone in their confusion; Baird analyst Colin Sebastian and Wedbush analyst Michael Pachter both expressed concern about the company’s lack of clarity on its road map.
Cramer sees clarity at AMC regarding Aron’s plans to turn around a company that was essentially left for dead prior to Covid and nearly went bankrupt during the pandemic. The company, whose stock has risen 2,100% this year, has also raised more than $1 billion for 2021.
But, unlike GameStop, Cramer said, “AMC gave you a great number and conference call,” referring to the theater chain’s announcement last month of a narrower-than-expected second-quarter loss.
This means that AMC’s theaters would generate enough revenue to cover all of the company’s operating expenses. As of early Thursday, the total for the year was nearly $2.2 billion, according to Box Office Mojo.
“This weekend, Adam Aron had a higher number than 2019. That is extraordinary,” Cramer said, referring to AMC’s announcement on Tuesday that more than 2 million people watched movies at AMC’s U.S.-based cinemas between September 2 and September 5, marking the highest number of admissions for a Labor Day weekend in the company’s history.
The Labor Day weekend attendance record for Disney’s “Shang-Chi and the Legend of the Ten Rings” boosted attendance. From last Friday to Monday, the domestic ticket sales for the Marvel Cinematic Universe film surpassed $90 million.