GameStop stock falls after wider-than-expected loss in Q3

Yahoo Finance Live anchors Brian Cheung, Julie Hyman, and Brian Sozzi examine GameStop's Q3 losses and perceptions of how the company is adapting to its stock's new value driven by meme stock investors.

Video transcript

BRIAN SOZZI: Who is hiring right now? It's GameStop, which is the second trending ticker on the Yahoo Finance platform right now, after really another ugly quarter last night. They said on their embarrassingly short earnings call, which was-- you know, we'll save that a little bit later-- but almost a little over eight minutes. They have hired year-to-date 200 senior managers from top tech companies.

Unclear what these people are doing here, except only contributing to GameStop's net loss. Net loss was over-- about $106 million in the most recent quarter. Sales were up. But again, this company continues to bleed losses, as they build out whatever they're going to do.

It's still not clear on their operating plan, under new CEO Matt Furlong, who should be ashamed of himself for holding an 8 minute and 14 second earnings call last night. His second abrupbt call. Just not a good look here. Where is your plan, my man?

But ultimately, the company is hiring to move forward with whatever it likes to do, opening up new offices in Seattle and Boston, and also continuing to benefit from sales of lower margin consoles from Sony, Microsoft, and the others. Julie, but another ugly quarter from this company.

JULIE HYMAN: I was thinking of you as I was looking at the information about GameStop this morning. The fact that, once again, the GameStop executives held that short call and didn't take questions from investors. I mean, there are only three sell side analysts who still cover the stock, down from nine before it became a so-called meme stock.

But you know, to your point, it seemed like investors were waiting for magic on this company, some kind of magic, some kind of engineering, some kind of strategy that was going to change the company's fortunes. And to be fair, the stock is still up a lot this year. And a lot of analysts say their earnings don't necessarily matter, I guess, until they do.

Because this morning, if you look at the shares, they do matter, right? And they have mattered since, you know, sort of mid-year, because we have seen the stock come down from the highs, even though it is still up, as you can see there, 925% over the past year.

So the question, I think, here becomes, do investors in this company continue to shrug off earnings, at some point, and turn the stock back higher, and get back into the stock? I mean, how patient are people going to be? I don't know that we entirely have the answer to that yet.

BRIAN SOZZI: Yeah, no, I'll just jump in real quick, Brian. You're seeing that patience wear thin. The stock is down 50% from its record high of this year. I tweeted out that fun fact very early this morning on my Twitter account. But the stock is down 50% from its high hit earlier in the year, really during this craze.

And Brian, you're seeing a loss in confidence in this company turning itself around. We're seeing it in real time. We see here in premarket, stock's down about 5% here.

BRIAN CHEUNG: Yeah, I mean, but certainly, I think, to Julie's point here, the fundamental story behind GameStop is still very much muddled by the events of what happened earlier this year. And I think that when you talk about the traders, who had been in GameStop prior to the meme stock explosion in late January, this is still a win for them.

When you consider that, again, this is a stock-- to reiterate-- that was about $18, $19 at New Year coming into 2021. And here we are at-- yeah, it's certainly a bit of a downdraft that we've seen after their earnings. And again, the fundamental story does remain in flux here. But for those people that we're asking for a fundamental change in-- not necessarily their business story, but in what the stock price was doing, what the chart looked like, this is still very much a win for them.

And I think that when we talked initially in those kind of early months of this year about what exactly the meme stock trade meant, what exactly was happening in the structural finance world with regards to what Reddit was doing, I think we can see. At the end of 2021, GameStop has not returned to the $18 levels that maybe some pessimists, who had been reading all of the events of late January, may have expected, right? It's still very much at elevated levels.

What does that do financially to a company? Well, maybe not necessarily in the case of GameStop, but with many other meme stock companies you have seen instances of leveraging the ability of the meme stock bump to buy back shares, to improve the capital position of the company. That, even though the initial story of a bunch of people, a bunch of apes on a social media thread trying to cram into a stock, ultimately did change the technicals and the fundamentals of the company. I think that's going to be a very interesting question, if we continue to see-- which I would expect-- more episodes of other meme targets in the future.

BRIAN SOZZI: I'll say this, finally, if you are a GameStop bull out there and you like nothing of what me, Brian, and Julie just said, please tweet us your hot take on GameStop. Very interesting to hear how--

BRIAN CHEUNG: Just tweet it to Brian.

BRIAN SOZZI: --you are feeling.

BRIAN CHEUNG: Just tweet it to Brian.

BRIAN SOZZI: Yeah, tweet at all of us. No, you're all on here. We're all in it to win it. Tweet at us. I'm very curious on why you like losing a lot of money.