GameStop meme shares up nearly 50% after company reports windfall profit for first time in 2 years
- GameStop reported an unexpected profit in the fourth quarter of 2022, boosting its share price.
- GameStop’s share price rose nearly 50% after hours on Tuesday.
- GameStop’s popularity skyrocketed in 2021 when investors used the WallStreetBets subreddit to pump up so-called meme stocks.
Shares in video game retailer GameStop, a meme popularized on the Reddit forum WallStreetBets, surged nearly 50% after hours on Tuesday after the company reported its first quarterly profit in two years.
GameStop reported a profit of $48.2 million in the fourth quarter of 2022, up from a loss of $147.5 million in the same period a year ago, despite a 1.2% decline in revenue to $2.23 billion. dollars.
“GameStop is a much healthier business today than it was at the beginning of 2021,” Matt Furlong, CEO of GameStop, said at the company’s earnings call on Tuesday.
GameStop returned to profitability through cost cutting and inventory optimization in 2022, Furlong said. This included downsizing the company’s staff and streamlining its operations.
The company is expected to continue cutting excess spending in 2023, including winding down operations in some European countries. It also aims to develop its highly profitable businesses such as collectibles and toys.
Furlong even said that GameStop has a “path to yearly profitability”.
GameStop’s popularity skyrocketed in 2021 when retail investors used the WallStreetBets subreddit to identify and pump so-called meme stocks. The chatter on the forum caused huge swings in stock prices for companies like GameStop and movie theater chain AMC, with GameStop up nearly 1,000% in a two-week period in January 2021. Since then, GameStop stock prices have declined but remain volatile.
Shares of GameStop closed up 4.6% to $17.65 a share on Tuesday. They increased earnings by another 48.4% to $26.20 apiece after hours.
GameStop shares are down 4.4% this year.
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