Video game company GameStop, which was at the centre of a Wall Street saga recently, reported lower-than-expected earnings on Tuesday but showed progress in building e-commerce sales.
The company, currently trading at almost ten times its value at the start of the year, reported fourth-quarter profits of $80.5 million, nearly four times the level in the year-ago period.
Revenues fell 3.3% to $2.1 billion
Both the earnings and revenues fell short of analyst expectations. Shares of the volatile equity initially rallied after the report, but then fell in after-hours trading.
The company, which has been building up its e-commerce business as the pandemic has shuttered retail stores, said global e-commerce sales jumped 175% compared with the year-ago period.
Digital sales now account for more than one-third of net sales, up from a 12% share in the year-ago period.
GameStop’s unlikely rise on Wall Street in 2021 results from a frenzy of buying interest from retail investors who exchanged advice and opinions on a popular forum at the Reddit website and came to the company’s defense when it was targeted by “short sellers” betting on a fall in value.
Analysts widely view the company’s jump in valuation this year as unmoored from the company’s performance.
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Still, some investors are hopeful about the company’s prospects given several major staffing shifts, as well as new board members committed to revamping the strategy.
Investors are keen to see the influence of activist investor Ryan Cohen, a co-founder of online pet products shop Chewy who joined the board earlier this year.
Shares fell 4.4% to $173.85 in after-hours trading.