As a result, GameStop's meme-inflated gains have faded away. The stock is down 45% YTD and off by more than 80% from its high in January 2021. Remarkably, the stock continues to trade well above its March 2020 lows, unlike many other meme stocks which are below these levels. Looking forward, despite the volatility in GameStop's stock price, nothing material has changed about the company. It still faces an existential struggle as video game sales shift online, and it remains encumbered by high costs.
Inside the Numbers
In Q3, GameStop reported a net loss of $95 million which was less than last year's Q3 loss of $105 million. Revenue came in at $1.2 billion which was lower than last year's $1.3 billion in revenue. Equally important, the company now has $804 million in cash from $1.4 billion last year.
This drop in cash is a concern for investors as it means the company will likely have to tap credit or equity markets for capital and risk further dilution. It will also raise concerns about management who could have more aggressively issued shares during the stock's runup.
In its conference call, CEO Matthew Furlong said the company is "is attempting to accomplish something unprecedented in retail ... seeking to transform a legacy business once on the brink of bankruptcy." As a consequence, it's focused on strengthening its balance sheet and increasing its cash position. It also continues to reduce costs and has laid off workers in the second half of the year.
Like many retailers, it's struggling with inventory issues. Currently, it has $1.13 billion in inventory which is nearly 50% more than its average levels. So far, the company's new NFT marketplace has failed to make a meaningful dent in terms of its financials. No doubt this is compounded by launching just as the market started to tank.