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HomeImmutableXGameStop’s turnaround plan has proved ‘fruitless’ so far, says analyst

GameStop’s turnaround plan has proved ‘fruitless’ so far, says analyst

GameStop Corp. reported its seventh consecutive quarter of losses after the market closed Wednesday, emphasizing the company’s goal of returning to profitability in the near future, but analysts say there are many challenges ahead. I warn you there is.

“In 2021 and 2022, we were very focused on fixing our rotten foundations,” said GameStop.

CEO Matt Furlong on a conference call late Wednesday.Halon also explained Staff reduction In the second half of 2022, GameStop said it was a stronger business than at any time in recent times.

Analysts weren’t convinced the company’s turnaround efforts were paying off, even though the stock rose more than 6% in the early days of trading on Thursday.

“GameStop’s turnaround plans have so far proven fruitless,” Wedbush analyst Michael Pachter said in a note released Thursday. of headcount reductions announced: “Short-term headwinds include bad NFT results [non-fungible token] market, broader NFT space shrinkage, ongoing hardware constraints, and cash burn. ”

Read now: GameStop reports worse-than-expected quarterly loss, lower earnings

game stop It has entered Earlier this year, we joined the NFT marketplace when we partnered with Immutable X Pty Ltd. to create a fund of up to $100 million in Immutable X’s IMX tokens.

See also NFT sales hit record low after falling 20% ​​in November

Video game retailers also face long-term headwinds, including liquidity challenges and an industry-wide shift to digital downloads, Pachter said.

Against this backdrop, he lowered GameStop’s price target from $6 to $5.30. He’s underperforming in GameStop stock.

Other analysts also point to difficulties facing the company. “Revenue and revenue shortfall [the third quarter] It notes a limited supply of console hardware and fewer hit video game releases, but reflects GameStop’s ongoing challenges to its retail model and limited progress on new initiatives. “Notably, the release (or conference call) made mention of the company’s widely publicized NFT Marketplace initiative,” Baird analyst Colin Sebastian wrote in a note released Thursday. and not sharing specific data about the transition to e-commerce.”

Related: GameStop Enters NFT Market With Partnership With Immutable X

Baird also expects more store closures and job cuts. “Given the long-term headwinds and the limited progress that can be made on key strategic initiatives, it makes sense that GameStop is increasingly focused on operational efficiency,” Sebastian wrote. increase.

However, analysts say the company could benefit from improved supply of all major consoles over the holidays and into next year. There is a possibility that it will be

GameStop, like fellow meme stocks, is owned by AMC Entertainment Holdings Inc.
It was the primary beneficiary of the enthusiastic purchase of Meme shares in January 2021. GameStop stock price from January to March 2021 rose above At 1,200%, the company’s market capitalization exceeded $17 billion.

GameStop’s stock is down 40% this year, outperforming the S&P 500

17.5% decrease. The company’s market capitalization is currently around $7.1 billion.

Also Read: GameStop shares saw their biggest drop since May after a surge. but why?

Independent equity research firm New Constructs describes GameStop as a “zombie‘ lowered its share price in August, highlighting the company’s cash burn as a problem.

GameStop ended the most recent quarter with $1.042 billion in cash, cash equivalents and securities. GameStop’s long-term debt remains limited to low-interest unsecured term loans related to the French government’s response to his COVID-19, the company said.

Of the three analysts surveyed by FactSet, one has a hold rating and two have a GameStop sell rating.


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