GameStop Shares Lose Value

GameStop Shares Lose Value

Retailer’s second fiscal quarter results fail to meet analyst and investor estimates. Company lowers third quarter estimates as a result.

Despite reporting a rise in sales and earnings, GameStop’s share value subsequently fell by 8 per cent. Trading opened significantly lower after the company’s second quarter figures were revealed, closing the day on $19.06, an 8.2 per cent drop on the previous day’s $20.76.

While GameStop reported $1.8 billion earned in sales (a rise of 3.4 per cent over the same quarter last year) and a 4.2 per cent increase in net earnings to $40.3 million (compared to $38.7 in the same quarter last year), the figures fell short of analysts’ and investors’ estimates for the quarter. 31.4 per cent of the company’s revenue came from used game sales.

GameStop also lowered its third-quarter profit estimate citing expenses connected with its new customer rewards program and its sales of downloadable content in stores. The company recently acquired games network Kongregate.

Wedbush Morgan analyst Michael Pachter described the quarter’s results as "sloppy" adding that he expects GameStop shares to remain under "mild pressure" until an expected industry rebound begins this fall. In a note to investors, Pachter lowered the company’s share target price from $28 to a "more realistic" $26.