Shares of GameStop (GME) are up 5% after the video game retailer posted quarterly financial results that beat Wall Street estimates on the top and bottom lines.
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For its Fiscal second quarter, GameStop announced earnings per share (EPS) of $0.25, which topped the $0.19 consensus expectation of analysts. Revenue in the quarter totaled $972.2 million, ahead of the $900 million that had been forecast on Wall Street. Sales were up 22% from a year earlier.
Management said that hardware and accessories is now GameStop’s biggest revenue driver. Sales in that segment amounted to $592.1 million, up 31% from a year ago. Collectibles revenue in the quarter of $227.6 million increased 63% from the previous year. However, software revenue of $152.5 million was down 27% year-over-year.
GameStop’s income statement. Source: Main Street Data
Crypto Strategy
GameStop noted that it had cash on hand of $8.7 billion at the end of the Fiscal second quarter, compared with $4.2 billion in the same period last year. Management attributed much of the success in the quarter to the release of the Nintendo (NTDOY) Switch 2 video game console, which drove hardware sales.
As GameStop’s network of retail stores has shrunk, the company has adopted a cryptocurrency treasury strategy, buying Bitcoin (BTC) and holding it on its balance sheet. The company reported that its Bitcoin holdings at the end of Fiscal Q2 were valued at $528.6 million. GME stock has declined 25% this year.
Is GME Stock a Buy?
The stock of GameStop has a consensus Moderate Sell rating among two Wall Street analysts. That rating is based on one Hold and one Sell recommendations issued in the last three months. The average GME price target of $18.25 implies 22.64% downside from current levels. These ratings could change after the company’s financial results.
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