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GameStop (GME) Q2 2021 earnings release shows larger than expected loss

GameStop just released their Q2 2021 earnings report. Here are all of the revenue and earnings details from the press release.
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Captain Business
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GameStop is out with their Q2 2021 earnings release. The company is reporting a worse than expected earnings-per-share (EPS) loss of $0.85/share with revenues of $1.183 billion. Here's everything of interest from the earnings release.

Here's a breakdown of the most interesting information disclosed in the GameStop Q2 2021 earnings release:

  • Net sales of $1.183 billion, up from $942 million during Q2 2020
  • Diluted loss per share of -$0.85 during the quarter
  • Cash on hand of $1.78 billion at the end of the quarter
  • No long-term debt, outside of a $47.5 million low-interest loan from the French government's COVID-19 response
  • Invested in long-term growth initiatives that include expanding the Company’s product catalog, enhancing its fulfillment network capabilities and technology, and adding talent across the organization.
  • Entered into a lease of a new 530,000 square foot fulfillment center in Reno, Nevada, positioning the Company’s fulfillment network to span both coasts of the continental U.S.
  • Entered into a lease of a new customer care center in Pembroke Pines, Florida and started building out U.S.-based customer care operations.
  • Operating margin: -4.9%
  • $11.5 million outflow of cash from operations during the quarter
  • Proceeds from the issuance of stock totalled $1.672 billion
  • Hardware and accessories revenue of $609.6 million 
    • 51.5% of sales
  • Software revenue of $396.6 million
    • 33.5% of sales
  • Collectibles revenue of $177.2 million
    • 15% of sales

Today's results are a mixed bag for GameStop shareholders, as the company did beat Wall Street's revenue expectations during the quarter, but at the same time came in light on the bottom line. The loss of $0.85/share is well below the EPS whisper number that expected a $0.38/share loss and the mean analyst estimate for a $0.66/share loss.

With recent additions to the Russell 1000 and the S&P 400 MidCap Index, many investors had hoped to see GameStop turn a profit in the near future. Being a profitable company over a specified period of time is required for inclusion to the S&P 500, and that part of the GME short squeeze thesis has yet to materialize.

This earnings release showcases the period of transition that GameStop (GME) finds itself in. It could be quite a while before the company transforms itself into new Chairman Ryan Cohen's vision of an online retailer that also has a brick-and-mortar presence. With the addition of the Reno, Nevada fulfillment center and the new Florida customer care center, it seems likely that GameStop is preparing for a big holiday season.

Shares of GameStop are currently trading down about $5/share from yesterday's closing price.
Shares of GameStop are currently trading down about $5/share from yesterday's closing price.

Shares of GameStop are currently trading slightly lower in afterhours, but many investors are still waiting for the conference call.

Listen to the GameStop (GME) Q2 2021 Earnings Conference Call here

You can listen to the GameStop (GME) Q1 2021 Earnings Call today at 2 p.m. PT/5 p.m. ET on the Shacknews Twitch channel, as we will be streaming the entire conference call live. If you don’t feel like going over to Twitch, you can also watch/listen to the broadcast using the video embed above. Keep it locked on the Shacknews GME topic page for all the GameStop news as it breaks.

GME shares took a hit when the conference call abruptly ended with no Q&A session.
GME shares took a hit when the conference call abruptly ended with no Q&A session.

The stock did end up dropping another $12/share after the conference call abruptly ended with no question and answer session. Tune in tomorrow to see how GameStop responds to this afternoon's news once it has been digested by mainstream media jaboofers.

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Full Disclosure:

At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, and his company Virtue LLC had the following positions:

Long GameStop via GME shares

Long GameStop via GME call options

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