Gamestop: What to expect in upcoming earnings report

GameStop (GME), a WallStreetBets favorite and year-end phenomenon, will release fourth-quarter and fiscal-year 2020 results on Tuesday afternoon. By Tuesday’s mid-session, the market had lost around 5% of its value.

According to Bloomberg, below are the consensus fourth-quarter Wall Street analyst estimates:

Estimated revenue: $2.21 billion

Estimated adjusted earnings: $1.43 per share

Estimated adjusted net income: $106.9 million

Before today’s conference call, GameStop reported the resignation of its Chief Customer Officer. Since activist investor and Chewy (CHWY) co-founder Ryan Cohen joined the board of directors after amassing a 13 percent stake in the firm, this is another big c-suite step.

The troubled brick-and-mortar video game retailer seems to be pivoting to digital and tech, with new updates within the past few months acting as catalysts for the stock’s rising price and increased retail investor speculation from sites like Reddit’s WallStreetBets.

Matt Francis, a former engineering executive at Amazon Web Services, was named as the company’s first-ever chief technology officer in early February. GameStop also revealed that Chief Financial Officer Jim Bell would be stepping down, causing the company’s shares to more than double in value.

Shares of the computer game store have been selling at a discount to fundamentals, according to Wall Street analysts. According to Bloomberg reports, the stock currently has no Buy ranking, 4 Holds, and 3 Sells.

When GameStop’s stock peaked at $483 intraday on January 28, it was the subject of a major short squeeze by retail investors. The stock has been on a roller coaster since then, but it is still up over 870 percent year to date as of Tuesday morning, hovering about $185 per share.

Analysts and institutional investors will be paying careful attention to commentary on Tuesday’s conference call about GameStop’s big digital/tech pivot since Cohen joined the board, and how it can translate into higher profits and a growing bottom line.

Analysts may still wonder why the firm hasn’t raised capital from a stock sale, seeing how far the stock has risen, but it’s unclear if management would try to address the short squeeze at all. GameStop executives have been tight-lipped about the situation so far.

The January short squeeze sparked congressional hearings and heightened oversight of the trading site RobinHood, which briefly prohibited investors from purchasing GameStop and other highly shorted stocks.

The growth of institutional investors and the influence of online communities have both gotten a lot of attention. In February, YouTube user “Roaring Kitty” told the House Financial Services Committee that he believes GameStop will pivot to a technology-driven market and that “by accepting the digital future, GameStop will be able to find new revenue sources that greatly outweigh the value of its business.”