Posted by on September 8, 2021 9:01 pm
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Categories: News Zero Hedge

Gamestop Drops: Cash Burn Continues As Revenue Beats, Cash Rises By $1 Billion

The original meme stock, GameStop, reported earnings after the close, and while the company’s financial have zero bearing on its valuation (which at $200/share translates into a $15BN market cap), the numbers did show some improvement as well as some interesting initiatives.

First, the highlights – Gamestop reported the following Q2 numbers:

Adjusted EPS loss of 76 cents, worse than the 67 cents consensus expected
Revenue of $1.183BN, up 26% from $942MM a year ago, and better than the $1.12BN exp. The revenue mix was as follows:
Hardware and Accessories net sales $609.6 million
Software net sales $396.6 million
Collectibles net sales $177.2 million

Despite the increase in sales, the company has a long way to go before turning profitable…

… or generating positive cash flow.

Among the notable development disclosed by the video game retailer is that it:

Entered into a lease of a new 530,000 square foot fulfillment center in Reno, Nevada, positioning the Company’s fulfillment network to span both coasts of the continental U.S. As expected, GME is aggressively going after online sales.
Entered into a lease of a new customer care center in Pembroke Pines, Florida and started building out U.S.-based customer care operations.

Perhaps the most notable change in the quarter was Gamestop’s cash at July 31, which rose to a record $1.7 billion, and increase of $1 billion thanks to the issuance of $1.121 billion in stock sold in an ATM offering this quarter.

In the past 6 months, GME has sold a net total of $1.673 billion in stock. In other words, without WSB, GME would have no cash right no.

Thanks to the surge in cash, GME ended the period with no long-term debt, “other than a $47.5 million low-interest loan associated with the French government’s pandemic response.”

In any case, with GME stock having long ago disconnected from the fundamentals, there was little reaction in GME stock which initially jumped only to fade and trade around 2% lower after hours as the release lacked the kind of short-squeezing oomph or shockers that could have sent the stock soaring.

Tyler Durden
Wed, 09/08/2021 – 16:36

Originally appeared on Read More

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