Meme Stock GameStop (GME) Is About to Report Q1 Earnings Tomorrow. Here Is What to Expect
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Wall Street analysts expect the company to report earnings of $0.08 per share, versus a loss of $0.12 in the year-ago quarter. However, revenues are expected to decline by 15% from the year-ago quarter to $750 million, according to data from the TipRanks Forecast page.
Recent Event
Ahead of the Q1 2025 print, GameStop invested in Bitcoin, following a strategy similar to Michael Saylor's Strategy (MSTR), a software company that turned into a serial Bitcoin acquirer. In a late-May filing, GameStop revealed it had purchased 4,710 Bitcoins valued at $513 million. The acquisition marked GameStop's first Bitcoin purchase since it unveiled its plans in March to start investing in crypto.
As earnings approach, investors will be watching closely for any updates on the company's digital strategy and sales trends in its retail segment.
GME's Q4 Shows Profit Surprise
In the last reported Q4 quarter, GameStop surprised with an earnings per share (EPS) of $0.30, far ahead of Wall Street's $0.08 estimate. The company posted a full-year profit of $131.3 million in 2024, a sharp turnaround from just $6.7 million the year before, mainly due to aggressive cost-cutting efforts.
However, revenue dropped 28.5% year-over-year to $1.28 billion in Q4, missing analyst expectations of $1.48 billion. Full-year revenue came in at $3.82 billion, down from $5.27 billion in 2023. The company continues to see weakness in its core video game hardware and software segments.
According to Main Street Data, GME's Hardware and Accessories segment has been on a downward trend, with recent quarters showing significant declines from earlier levels.
Options Traders Anticipate a Large Move
Using TipRanks' Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don't worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting an 11.05% move in either direction.
Is GME Stock a Buy, Sell, or Hold?
GameStop's fundamentals and unpredictable trading patterns have led many Wall Street analysts to take a step back from covering the stock. One of the few analysts still covering this stock is Michael Pachter of Wedbush, who continues to maintain a Sell rating. According to him, he sees more than 54% downside for GameStop based on his price target of $13.5 per share.
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