GameStop says it isn't just selling video games — it's also 'evolving' into a tech company
GameStop (GME) apparently no longer sees itself as a retailer under the dual leadership of new chairman Ryan Cohen and CEO Matt Furlong, but rather as a tech company perhaps some day worthy of being in the same discussion as an Apple (AAPL), Microsoft (MSFT), and Google (GOOG, GOOGL).
"GameStop has two long-term goals: delighting customers and delivering value for stockholders. We are evolving from a video game retailer to a technology company that connects customers with games, entertainment and a wide assortment of products," GameStop said in a comment buried in its quarterly 10-Q filing with the SEC on Thursday.
The king of meme stocks didn't expand too much on this interesting business model pivot as Furlong took no questions on his first earnings call as CEO and shared zero information regarding its business plan. Traders subsequently punished the stock to the tune of 10% during Thursday's session.
But GameStop did highlight some efforts underway in its aforementioned filing. They include:
"Increasing the size of our addressable market by growing our product catalog across consumer electronics, collectibles, toys, and other categories that represent natural extensions of our business.
Expanding fulfillment operations to improve speed of delivery and service to our customers.
Building a superior customer experience, including by establishing a U.S.-based customer care operation.
Strengthening technology capabilities, including by investing in new systems, modernized e-commerce assets and an expanded, experienced talent base."
To be sure, GameStop had a lot in common in the third quarter with certain upstart tech companies in that it lost a ton of money yet again.
The company posted an adjusted loss per share of 76 cents vs. a Wall Street estimate of 67 cents with revenue of $1.18 billion compared to $1.12 billion expected.
Sales rose 25.6% from a year ago on the back of demand for new gaming consoles from Sony and Microsoft (MSFT). The company also highlighted increased costs in transformation into a tech company as one culprit for the steep loss.
Now all eyes turn to Cohen and Furlong to deliver results of any kind.
Whether GameStop wants to launch cloud services to compete with Amazon or transform into a Best Buy is wildly unclear. The uncertainty on what's next is being reflected in GameStop shares — the stock is nearly down 50% from its Jan. 27 record high of $347.51.
All the Street could do is speculate on GameStop's path forward given limited insight from management.
"We are closely monitoring two specific areas — infrastructure investments and clues as to the future scale of a digital business; and personnel changes, as a signal for changes in strategic direction guided by a new board & CEO. With increased fulfillment capacity and a more nationwide footprint, delivery speeds are due to be faster and last mile costs lower. The product catalog continues to expand beyond traditional hardware & software — toys, sporting goods, cosplay/costumes, apparel, etc. — implying a stretching of the historic boundaries around core gaming. GameStop CRM remains a valuable asset to future value unlock. As fandom digitizes, we're also intrigued by GME's potential role in the development NFT marketplace," hypothesized Jefferies analyst Stephanie Wissink in a research note to clients.
Yahoo Finance's Ines Ferre contributed to this story.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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