It’s been a rough few weeks for classic meme stocks, with GameStop falling about 50% ahead of today’s earnings report.
This carnage helped set the stage for a relief rally, despite the company’s sales decline and widening loss. But, like many other meme stocks with struggling underlying businesses to fix, the company continues throwing spaghetti at the wall. 🍝
Last month it replaced its CFO and laid off employees to preserve cash as it invests in “a digital future.”
Today’s announcement focused on its efforts to become profitable, launch proprietary products, and invest in its stores…all while trying to lower costs. How it will be able to do both at the same time remains to be seen. 🤷♂️
It’s also continuing its push into the crypto/blockchain space, announcing a new partnership with crypto exchange FTX. 🤝
Additionally, the company is taking steps to incentivize its store leaders to take ownership of the turnaround. These incentives include granting $21,000 in stock, which vests over three years, and additional stock-based performance bonuses. It’s also raising hourly pay for some store employees.
The underlying business remains in disarray, so we’ll have to see if its pivot into new businesses pays off in the quarters ahead. However, as discussed, sentiment heading into the report was pretty bad, which likely helped spark the 12% after-hours rally. 👀
