The Champion of Missed Opportunity is won by GameStop

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The results of the “meme” company for the third quarter did not impress investors, and after the close of the market, the shares lost about 3%.

Even though Gamestop (GME) Q3 revenue rose 29% YoY to $1.3 billion, not only did its net loss not shrink, it actually grew. EPS was -$1.38 against -$0.78 a year earlier. The market assumed the possibility of a loss on EPS of $0.52 and revenue of $1.19 billion. This forced us to adjust down our forecasts for the current quarter on EPS to $0.87.

Gamestop management said that a «slight decline» in the number of gamers, a shortage of chips, as well as problems in the supply chain were to blame.

In our humble opinion, the problem lies in the company’s inability to move away from its outdated brick-and-mortar business model (customers are still wary of going to them due to the pandemic).

The attempt of the new CEO and a number of top managers who came from Amazon to bet on interaction with brands such as Samsung and LG, as well as the desire to transfer the business to digital transformation, is still a “black box” and will not give a serious increase in profits in the near future. The additional issue, carried out on the wave of «hype» in June, gave the company $1.13 billion.

However, while all the measures taken rather look like a waste of time. The company has not fundamentally changed the model of interaction with customers and is not ready to change in other business processes.


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