GameStop Stock Ripe for More Volatility Than Usual Post Q2 Earnings

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Stocks Analysis by The Tokenist (Timothy Fries) covering: GameStop Corp. Read The Tokenist (Timothy Fries)'s latest article on Investing.com

) dropped by 15%, going from Tuesday’s $23.50 to $19.93 per share. This puts the stock closer to its 52-week average of $17.80 and far removed from the 52-week high of $64.83 per share.

Accordingly, the company massively beat analyst projection of $0.08 earnings per share loss vs reported $0.04 gain. For comparison, in the period’s prior year, GameStop was also in the negative EPS zone at $0.01. What would then be the role of GameStop as an intermediary? Of the total $798.3 million revenue in Q2, the company clearly relies on hardware and accessories, constituting 56.5% of sales. This is a major problem for GameStop given that hardware stores are even more readily available, both physical and online.

During these volatility periods driven by speculation, GameStop went on a selling spree. In May, this amounted to 45 million shares worth around $933 million, topped by 75 million shares in June, bringing in another $2.14 billion. From GameStop CEO Ryan Cohen’s statements, the focus is on cost reduction, expansion of higher value items and reduction of the store network. It also bears noting that the Fed is set to cut interest rates this year. In June’s shareholder meeting, Cohen stated that this dynamic plays a key role in his investment outlook.

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