GameStop revenue shy of estimates; profits rise, shares up after hours

FILE PHOTO: A person walks past a GameStop in the Manhattan borough of New York City, New York, U.S., January 29, 2021. REUTERS/Carlo Allegri/File Photo

(Reuters) – GameStop Corp, the video game retailer at the center of this year’s Reddit-driven trading frenzy, fell short of holiday-quarter revenue estimates on Tuesday, squeezed by pandemic-led store closures and as more gamers drifted to online puchases.

Adjusted net income rose to $90.7 million, or $1.34 per share from $83.8 million, or $1.27 per share, a year earlier.

The company’s shares rose 5% in extended trading, paring the losses it made in regular hours.

GameStop’s shares have skyrocketed this year as amateur traders bet against Wall Street hedge funds that had shorted its shares, driving the company’s valuation to as high as $33.68 billion, more than Best Buy. The stock has become one of the hottest and most visible “meme stocks” followed on social media.

The results come as top shareholder Ryan Cohen, the billionaire co-founder of online pet supplies retailer Chewy, tries to transition the company into an ecommerce business that can take on big-box retailers such as Target and Walmart, as well as technology firms such as Microsoft Corp and Sony Corp.

GameStop said it would spend 2021 improving the speed of its delivery services, expanding its product offering and hiring people experienced in e-commerce.

Net sales fell to $2.12 billion in the fourth quarter, the ninth straight quarter of declines. Analysts on average had expected $2.21 billion, according to IBES data from Refinitiv.

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