- GameStop disappointed investors by skipping an announcement of an acquisition, after such plans had been teased earlier in the year.
- GME gained 0.3% in Wednesday’s premarket session.
- GameStop’s securities holdings jumped sharply.
GameStop shares traded marginally higher in early premarket trading on Wednesday, after it posted results that showed sales and profit declined in the fourth quarter. The biggest takeaway was that the video game retailer skipped announcing an acquisition.
CEO Ryan Cohen has indicated interest in buying a publicly listed retail business back in January, and investors were looking for an update on the plan. There was, however, one earnings line item that piqued retail traders' interest. GameStop said “marketable securities” were $2.7 billion as of the end of January, compared to just $18 million a year ago.
Marketable securities are typically low-risk, highly liquid debt instruments such as Treasury bills, commercial paper, and corporate bonds, but may also include stocks in some cases.
GameStop did not furnish details for those securities. Overall, the company doubled its total assets, which include cash and Bitcoin holdings, to $10 billion.
Retail’s View On GME
“$GME what did we buy $2.6B of?” questioned a user on the GME stream on Stocktwits, while another said the company now appears to be operating like a “hedge fund.”
Even as retail sentiment flipped to ‘bullish’ early Wednesday, compared to ‘bearish’ the previous day, traders returned underwhelmed by the muted move in the stock.
“$9B cash. $350M or so it BTC. No debt. Profitability keeps increasing quarter over quarter. Market cap is barely above $10B? This makes no sense at all. Even a $30SP would be cheap,” remarked a user.
Meanwhile, GameStop’s underlying business continued to shrink. Revenue fell 14% to $1.10 billion, while profit declined to $127.9 million from $131.3 million.
In keeping with recent quarters, sales of hardware, accessories and software declined, while collectibles revenue grew. Collectibles now make up about a third of total sales, up from 21% a year before.
More details about the business or its acquisition strategy weren’t immediately available as the company does not hold a post-earnings analyst call.
As of the last close, GameStop shares were up 9% year to date.
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