The greatest gift GameStop (NYSE: GME) stock gave us was a legendary short squeeze two years ago.
Since then, it’s enjoyed a few nice blips whenever the “meme stock” contingent tries to make 2021 happen again — but that’s about it. Overall, the trend has been decidedly negative, which is why so many traders and brokerages carpet-bombed the stock with short trades to begin with.
To wit…
GameStop stock surged 9% last Friday when its chief champion, investing influencer “Roaring Kitty,” made a cryptic social media post on X.
See that sentence? I absolutely hate myself for writing it.
Honestly, I hate to sound like a crabby old man, but do people even take investing seriously anymore? This is real money we’re talking about.
Ah, well. I guess if we’re going to make investing a game, it’s fitting we do it with the video game retailer that brings nothing but nostalgia to the table. Join Wealth Daily today for FREE. We’ll keep you on top of all the hottest investment ideas before they
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Seriously, no one really buys physical copies of video games anymore, so GameStop’s latest gambit is to open a series of “GameStop Retro” locations to sell games and consoles most people stopped playing years ago.
At best, this will be good for a temporary boost in sales. Aside from that, though, it’s literally the exact opposite of “forward-looking.”
But since we’re looking back, we might as well revisit GameStop’s last earnings report in light of the fact that it’s set to deliver second-quarter results after the market closes today.
GameStop Earnings
GameStop badly missed earnings in the first three months of 2024. The company reported a 29% drop in both revenue and earnings on its way to a $32.3 million net loss ($0.11 per share).
Worse, management announced the sale of another 75 million shares on top of the 45 million share sale it announced in May.
With that, GameStop stock tanked 47%, tumbling from $47 to $25 per share.
Dilution is never a welcome development for stockholders, but the upside is that the money raised can be channeled back into the business to improve its outlook. But if retro gaming stores are all GameStop has up its sleeve, that’s pretty underwhelming.
It’s certainly not a solution to a decade-long trend of falling revenue.
If accurate, that would make for the ninth EPS loss in the company’s last 10 quarters.
Could GameStop surprise to the upside?
Sure. Overall video game sales totaled $57.2 billion in 2023, up from $56.6 billion in 2022, according to data released by the Entertainment Software Association and Circana.
Sales are expected to trend higher this year, as well. Helldivers II has been a hot title all year and EA Sports’ College Football 25 reportedly helped drive a 10% increase in video game spending in July.
It’s definitely possible that GameStop got a boost from the overall trend. But the problem was never that video games aren’t popular — we know they are. The problem is that they’re increasingly coming by way of digital download.
This makes GameStop something of a tar pit gurgling with the fossils of a bygone era.
So if the kids want to play with it, let them. But for me, GameStop stock is hardly worth entertaining.
Fight on, Jason Simpkins Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more… In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor’s page. Be sure to visit our Angel Investment Research channel on YouTube and tune into Jason’s podcasts. Want to hear more from Jason? Sign up to receive emails directly from him ranging from market commentaries to opportunities that he has his eye on. 
