GameStop Earnings Preview

    • GameStop shares are up 165% year-to-date.
    • This article was first published in the FOS Daily Newsletter. Subscribe here.

Video game retailer GameStop is set to report its third quarter earnings Tuesday, hoping to reverse its trend of falling sales. Revenue is down 31% in the first half of 2020. 

The company’s second quarter saw a 27% slump in sales year-over-year despite video game spending reaching its highest level nationally in 10 years. 

GameStop’s latest quarter could show more of the same as multiple factors impact its business.

  • Game sales were down 10% from Black Friday to Cyber Monday as multiple reports speculated that consumers were waiting to get their hands on next-gen consoles from both Microsoft and Sony before buying new games. 
  • GameStop is slated to close more than 400 stores globally this year as consumers flock to online retail. 

GameStop shares are up 165% year-to-date as investors have remained optimistic in the booming video game industry. 

  • Overall video game industry sales reached $11.2 billion in the third quarter, up 24% year-over-year, according to The NPD Group.
  • In October, GameStop and Microsoft announced a partnership to share lifetime digital sales revenue — including for full game downloads, downloaded content and subscription plans — for any Xbox console sold through its stores.
  • GameStop posted an 800% increase in global ecommerce sales in its second quarter, but that only represented about one-fifth of its total net sales.

Digital Outlook: In November, Chewy founder Ryan Cohen — GameStop’s single-largest shareholder — called on the company to do a strategic review of its business.

Cohen wants to transform the company into an e-commerce giant that offers fast shipping on a wide variety of items. He also called on the company to make investments in esports, mobile gaming, and game streaming.

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