By Dhirendra Tripathi
Investing.com – GameStop stock (NYSE:GME) fell over 5% in premarket trading on Thursday after the video game retailer disappointed traders with another quarterly loss.
Compounding the poor results was the company’s disclosure that the U.S. securities regulator issued it a subpoena in August for documents on a probe into its share trading activity. GameStop ruled out any adverse impact due to the inquiry.
The net loss of $105 million was wider than expected and also more than five times the loss in the last financial year’s third quarter. The loss, GameStop’s sixth in the last seven, underscores the challenges it needs to overcome in the digital world.
In the last year, the company has overhauled its management, raised fresh funds, while extinguishing most of the debt, and revamped its stores to attract a new audience. Before all this happened, GameStop started the year as the Reddit gang's favorite meme stock that also fueled its rally by more than 900%, the subject of SEC's study.
The stock is now 64% off the year’s high as stakeholders await a sound turnaround strategy. Ryan Cohen, the co-founder of pet supply company Chewy (NYSE:CHWY) who joined the board earlier this year, has outlined a strategy for GameStop with a wider choice of digital products. The market is still awaiting the final word on it.
Net sales rose 29% to $1.3 billion in the three months ended October 30 and were higher than estimated. The company attributed the rise in sales to new and expanded partnerships such as those with Samsung (KS:005930) and LG.
It also said its inventory level, at $1.14 billion at the end of October, is higher by a third from the year-ago levels and reflects its efforts to meet consumer demand and mitigate supply chain issues.