On Wednesday, December 7th, after the close of the market, GameStop (NYSE:GME) is expected to release its Q3 earnings data. Consensus revenue estimates are $1.35B (+3.8% Y/Y) and $0.28 per share of earnings (EPS) (up 79.9% year over year). EPS projections have been revised 3 times higher and zero times lower during the last 3 months. There have been 2 decreases and 1 increase in revenue projections.
The abundance of volatility surrounding the earnings announcement is suggested by options trading. Even though it is not expected that the shop will make a profit for the quarter, the recent launch of an NFT/Web3 wallet for iOS and the update on sales projections for the holidays may be enough to turn things around.
The last time GameStop made money was in the second quarter, even though sales were lower than expected. The category that plans to increase over time, collectibles, accounted for $223.2 million in sales for the quarter.
Consumer spending on video games was slow in the third quarter, down 5% from the same time in 2021. This is the latest time that the industry has had a hard time comparing itself to a very strong year before. This is because consumers kept looking for new experiences, even though there were more platforms available.
According to the NPD Group’s Q3 2022 Games Market Dynamics U.S. report, total spending for the July–September quarter was $12.34 billion. There was a big drop in spending on content, which was only partly made up for by higher spending on hardware.
GameStop stock forecast
GameStop (NYSE:GME) is still fundamentally in a mess with concerns about valuation and profitability, according to Wedbush Securities analyst Michael Pachter. The lowest price objective on Wall Street is set by Wedbush at $6 for the stock.
Recent reports say that the meme-stock craze for video game store GameStop stock peaked in January 2021, when billionaire investor Carl Icahn started building up a large short position in the company. SA contributor Mike Zaccardi also thinks that there are more downside risks than upside prospects because the company isn’t making much money, has a high valuation, and has weak sales of video games in general.
GameStop’s Seeking Alpha Quant Rating is Hold, and the stock’s quant score is good enough to rank it in the top half of the consumer discretionary industry. GME’s sales and earnings per share (EPS) have been 38% and 63% higher than expected over the last two years, respectively.
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Featured Image – Pexels © Matilda Wormwood
Author Jowi Kwasu 
