By Nathalie Voit
GameStop Corp. (NYSE: GME) shares were down over 10% to $155.76 by EOD Dec. 9 after the video game retailer posted dismal financial results for its latest fiscal quarter and unveiled new details of a Securities and Exchange Commission (SEC) subpoena.
The company reported a net loss of $105.4 million, or $1.39 per share, for the third quarter ending Oct. 30. In contrast, the company lost $18.8 million, or 29 cents per share, at the same time last year.
Total revenue increased nearly 30% year-over-year to $1.30 billion for the third quarter. The company said the surge in sales was due to new and expanded relationships with brands like Samsung, LG, Razer, and Vizio.
Inventories were $1.14 billion at the close of the quarter, compared to $861 million in the 13 weeks ending a year earlier. The company said heightened inventories reflected the company’s commitment to meeting increased consumer demand for the holidays and mitigating supply-chain problems.
GameStop’s grim earnings report follows a year of soaring global sales for the 37-year-old chain store group. At the pandemic’s beginning, shares could be bought for just $3.25 each. At the height of the amateur-led trading frenzy in late January, shares soared to a whopping $483.00. Shares are now worth around $155.00 as the hype surrounding the troubled retailer vanished as rapidly as it had arisen.
The company is now turning in documents related to an SEC subpoena filed in August. The subpoena is part of a months-long investigation into the company’s trading activity.
“We are in the process of producing the documents and have been and intend to continue cooperating fully with the SEC Staff regarding this matter. This inquiry is not expected to adversely impact us,” the company said in a regulatory filing on Wednesday.
Despite the losses, GameStop shares have risen over 850% this year. Third-quarter sales also came ahead of its $1.19 billion estimate, Reuters reported.
In its Q3 2021 earnings call on Wednesday, the Grapevine, Texas-based retailer said the company had opened new offices in up-and-coming tech talent hubs Seattle and Boston and secured a new $500 million asset-based lending credit facility in November to aid with liquidity and reduce borrowing costs.
“During the quarter, we focused on expanding our selection, accelerating delivery speeds, and improving the customer experience. We also made long-term investments in our infrastructure, talent, and technology,” CEO Matt Furlong said.
Furlong also added that the company was “exploring emerging opportunities” in blockchain, NFTs, and Web 3.0 gaming.
“Our focus on the long term means we will continuously prioritize growth and market leadership over short-term margins,” Furlong claimed in the conference call.
