GameStop posts larger loss, revenue miss estimates

81
1
GameStop posts larger loss, revenue miss estimates

Videogame retailer GameStop Corp reported a larger than expected loss and quarterly revenue that missed estimates, hurt by a dearth of new hit game releases and a pullback in spending against the backdrop of decades-high inflation.

GameStop launched a digital wallet earlier this year to allow gamers to buy, sell and trade non-fungible token, or NFTs.

GameStop's digital wallet ambitions are facing a grim future as a result of the winter setting in and the value of cryptocurrencies plummeting.

Gaming companies are facing a slow down in demand for video games from pandemic highs, exacerbated by the stubbornly high inflation that has hampered consumer spending ahead of the key holiday season.

GameStop reported revenue of $1.19 billion in the third quarter, missing estimates of $1.36 billion, according to Refinitiv IBES data.

The company lost 31 cents per share, compared to analysts' estimates of a loss of 28 cents per share.

They managed their working capital well, so they didn't burn much cash, but they still had a loss of about 95 million. That's unsustainable unless they get profitable one of these days, and directionally, it doesn't look like that's going to happen, Wedbush analyst Michael Pachter said.

The company has tried to cut costs by reducing its workforce and shutting down stores as a percentage of revenue, but GameStop's expenses for the quarter were 32.7 per cent, down from 34.1 per cent in the second quarter.

The company's shares were up about 1 per cent in after-market trading.

Matt Furlong, GameStop Chief Executive, said that capital expenditure will remain at similar or reduced levels now that the company has completed its period of heavy investment.