GameStop (GME) Stock Analysis
- GameStop products: GameStop’s e-commerce site which sells video games, consumer electronics, and gaming merchandise. GameStop is also developing NFT Wallet and Marketplace.
- GameStop revenue composition: 100% retail.
- GameStop is competing in the retail industry.
- GameStop is the king of “meme” stocks with a huge fan base that is determined to hold/buy the shares for the long term.
- Revenue Q/Q (1.28B -> 1.38B) +8%
- Revenue Y/Y (TTM) (5.35B -> 6.11B) +14%
- Gross Margin 22%
- Operating Margin -11%
- Net Margin -11%
- Gross Profit Q/Q (330.1M -> 298.1M) -10%
- Gross Profit Y/Y (1.31B -> 1.32B) +1%
- Operating Expenses Q/Q (370.9M -> 451.8M) +22%
- Operating Expenses / Gross Profit Q/Q (451.8M / 298.1M) 152%
- Operating Expenses / Gross Profit Y/Y (1.8B / 1.32B) 137%
- Market Cap: 8.86B
- P / S: 1
- P / Gross Profit: 7
- P / Operating Income: No Income
- P / E: Not Profitable
- Revenue only grew 8% in the latest ER. It could be even slower in future quarters.
- It is losing money and profitability is deteriorating. Operating expense increased 22% while gross profit decreased 10% in the last quarter.
- Announced 4-for-1 stock split.
- Launched GameStop Wallet that allows users to store cryptocurrencies.
- Planned to launch the NFT marketplace by the end of the second quarter.
The Bottom Line
- GameStop stock itself represents the power of individual investors. These investors will continue to hold and buy shares to show that Wall Street cannot always manipulate the market.
- GameStop could eventually become a technology company like OpenSea that allow users to trade game-related NFT or crypto assets.
- GameStop’s membership model could get users attached to the platform since it is the only e-commerce site that specializes in gaming.
- Brick and mortar businesses would eventually die due to digitalization.
- Specialty retailers like GameStop cannot compete with large discounted retailers like Amazon due to the economy of scale.