- Earnings trounce forecasts at $0.16 per share, versus -$0.13 expected
- First quarterly profit in 24 months
- Investors betting on the start of a far brighter future
One-time meme hype stock GameStop (GME:NYSE) surged nearly 45% in pre-market trade on Wednesday (22 Mar) after chief executive Matt Furlong hinted that the business was in the best shape of its life.
Alongside the company’s fourth quarter earnings, the CEO of the computer games retail chain said it was much ‘healthier’ in the present day than when 2021 began and said GameStop has ‘considerable cash on hand, negligible debt, streamlined inventory, and a path to full-year profitability.’
This is significant. Over the years GameStop has run up hundreds of millions of dollars in net losses and negative free cash flows as it has stumbled along a path from shopping malls to online business.
INVESTORS LEFT STUNNED BY EARNINGS BEAT
No wonder investors rallied behind the company’s Q4 results, sending the share price soaring from $17.65 to $26.75. That values the business at $7.75 billion.
This was a stunning performance on an EPS (earnings per share) basis, coming in at $0.16 versus analyst consensus pitched at a $0.13 loss. Revenue of $2.23 billion also beat the Street estimate of $2.18 billion.
Q4 net income came in at $48.2 million, which represents a quarterly profit for the first time in 24 months. The company ended the year on a positive note after dealing with challenges such as decreased sales, inventory difficulties, and cash flow pressure.
Full-year net sales were $5.93 billion, compared to $6.01 billion for 2021, with the company posting increased sales in the collectibles category, which is an area in which it continues prioritising long-term growth.
