GameStop tanked as much as 18% on Wednesday after the company pushed its yearly sales forecast lower and announced a decline in second-quarter revenue for nearly all of its businesses.
GameStop’s CEO announced a new plan to boost its operating profit by $200 million by 2021, focusing on optimizing business efficiencies and building out its digital marketplace.
The loss is a big hit to famed “Big Short” investor Michael Burry’s recently-disclosed 3% stake in the video game retailer, made through his hedge fund.
Burry said the company’s balance sheet was in “very good shape” and that the expected inclusion of disk drives in next-generation consoles will “extend GameStop’s life significantly.”
Watch GameStop trade live here.
GameStop tumbled as much as 18% on Wednesday after the video-game retailer announced slowing revenue, accelerated losses and lowered sales expectations for the year.
The company saw year-over-year slowdown in hardware, software, accessory, and used-product sales through its second quarter. The flop in pre-owned sales hits GameStop the hardest, as it brings the company the highest profit-per-sale and continues a trend of such sales declining.
The “Big Short” legend Michael Burry recently disclosed a 3% stake in GameStop through his hedge fund, Scion Asset Management. The investor, portrayed by Christian Bale in the Oscar-nominated 2015 film, urged the company’s board to continue its $300 million share buyback program, adding the company’s balance sheet was in “very good shape.”
Burry also noted the expected inclusion of disk drives in next-generation consoles will “extend GameStop’s life significantly,” as the retailer focuses on physical game sales.
Burry’s announcement sent the company’s stock up as much as 20% on August 22. His investment has netted the firm more than $2 million since then despite Tuesday’s earnings disappointment.
Here are the key numbers from GameStop’s earnings report:
Earnings per share: -$0.32, versus the -$0.194 estimate
Revenue: …read more
Source:: Business Insider