The stock price of GameStop plunged on the 24th (local time). This is because it was not able to come up with a detailed plan for digital transformation in the earnings announcement the day before, and the possibility of a large-scale capital increase in the future emerged.
On this day, in the New York Stock Market, GameStop stock price closed at $120.34, down $61.41 (33.79%) from the previous day. GameStop announced that it had $2.12 billion in sales and $1.34 per share in the fourth quarter of fiscal 2020 after the market close the day before. It was lower than the Wall Street estimates compiled by financial information company Refinitiv (earnings per share of $1.35 and sales of $2.21 billion).
In particular, it did not present an earnings outlook for this year or a specific restructuring plan, and did not receive questions from investors or analysts. This received fierce backlash from Wall Street.
According to CNBC, Telsea Advisory analyst Joe Feldman criticized in his analysis report that “everyone was expecting big news about digital transformation through the newly formed board, and they didn’t say anything.” “The talk of the future strategy sounded like every other retailer: investing in technology, building great customer experiences, expanding product offerings, etc.,” Feldman said. Pointed out. Feldman lowered the target price from $33 to $30, and revealed that the current share price ($181 the previous day) is’divorced’ from business fundamentals.
Gamestop stock price surged 1625% in January as a result of collective purchases of individual investors flocking to the online community’Reddit’, and it is still close to 700% even though the plunge on that day. Gamestop also admitted that the soaring stock price at the beginning of the year “is not in balance or has nothing to do with the company’s performance,” in a disclosure document filed with the Securities and Exchange Commission (SEC) the day before.
Bank of America (BofA) also criticized GameStop’s performance announcement. BofA criticized GameStop for not revealing any details regarding the restructuring in its quarterly earnings conference call, and that there was no Q&A section in the 22-minute conference call. BofA’s Analyst Curtis Nigel said in an analysis report, “GameStop has been performing very hard and needs rapid change, but little details of its turnaround plan have been disclosed.” “I am constantly skeptical about the fact that the market for console game consoles is rapidly shrinking.” BofA offered a target price of $10 for the GameStop as before.
Securities firm Wedbush, like Telshi and BofA, presented an investment rating of’reduced weight’. The median target price for Wall Street analysts was estimated at $25.
The plunge in GameStop’s stock price on this day also affected the fact that it was revealed that it could issue large-scale stocks by revealing its earnings after the close of the previous day. “Since last January, the company has been evaluating how to sell common stocks in fiscal year 2021. It is intended to accelerate future change and raise general working capital,” it said in a filing with the SEC.
However, Jeffreys raised the target price of GameStop on the day by more than 10 times from $15 to $170. However, the investment grade was presented as’pending’. According to Reuters, Jeffreys’ analyst Stephanie Wisink said in a report that “an internal investment banking department was hired as a lead over GameStop’s potential capital increase plan.” It also added, “The company owns more than 1% of its shares in GameStop’s common stock through its affiliates or subsidiaries.”
Wisink analysts highly praised Jenna Owens, who had experience at Amazon and Google, as the new Chief Operating Officer the day before. “The change in leadership, including the board of directors, executives and the recruitment of new COOs, is a sign that we are completely reimagining our business model,” he said. “We will continue to evaluate the digital transformation that can justify mid-term evaluation as GameStop’s stock price clearly has volatility beyond fundamentals,” he added.
Reporter Kim Hyun-seok [email protected]