Wednesday March 24th 2021
Focus on online gamers
Gamestop wants to reposition itself
The video game retailer Gamestop, known for its spectacular stock turbulence, continues to suffer from business losses. In the three months to the end of January, sales fell three percent year-on-year to $ 2.1 billion, around 1.8 billion euros, as the company announced on Tuesday after the US market closed. The profit rose, not least thanks to lower expenses, from $ 21.0 million to $ 80.5 million. In addition, online sales increased by 175 percent. However, market expectations were disappointed.
In a strategy update, Gamestop announced that it would continue to abandon the business model of a classic retail chain for computer games. Instead, the company wants to transform itself into a technology company for online gamers. In line with this, Gamestop introduced Jenna Owens, a tech veteran who already worked for the internet giants Google and Amazon, as the new board member responsible for day-to-day business.
At the beginning of the year, Gamestop made headlines with a real speculative battle on the stock exchange. The company has actually been in crisis for a long time, but driven by small investors organized on the Internet, the shares had rallied breathtakingly. That in turn broke hedge funds that bet on a price decline, huge losses. In January, the share had reached a record high of over 483 dollars, most recently it cost only 182 dollars, which still corresponds to a price increase of 865 percent since the beginning of the year.
In view of the extreme volatility of prices and the high level of attention caused by the turbulence on the stock market, the financial report serves as a kind of reality check for – viewed soberly, relatively dreary – day-to-day business. In the entire past fiscal year, Gamestop’s revenues fell by around 21 percent to $ 5.1 billion. The bottom line was a loss of $ 215.3 million.
The branch business with video games is not considered to be a major growth driver anyway and suffers even more in the pandemic. But although analysts haven’t trusted the company much for a long time, a die-hard fan base has formed in Internet forums.
One of their hopes is investor Ryan Cohen, who took over a position on the board of directors in January and turned pet supplies retailer Chewy inside out with a successful e-commerce strategy. Gamestop fans like Youtube star Keith Gill known as “Roaring Kitty” see a lot of untapped potential and believe the company will get back on track.