After their most recent earnings, it turned out GameStop has become profitable. It is the first time in years they are. Net sales were down, mainly because of cost cutting; closing stores that didn’t generate enough money. The question is, how will GameStop build new revenue streams in order to grow its profitability further?
GameStop’s most recent earnings didn’t meet the expectation of analysts, but showed profitability. They turned around a $300 million loss into a $6 million profit. The complete overview of their earnings and fiscal year results is as follows:
GameStop stated what their objectives are in their most recent Form 10-K:
Establish Omnichannel Retail Excellence. We aim to be the leading destination for games and entertainment products through our stores and ecommerce platforms. To accomplish this, we are taking steps to ensure we are a fast and convenient solution for our customers. This includes increased product availability across all channels, faster fulfillment through ship from store offerings, and a further improved customer service experience.
Achieve Profitability. During fiscal 2023, we continued to optimize our cost structure to align with our current and anticipated future needs. We will continue to focus on cost containment as we look to operate with increased efficiency.
Leverage Brand Equity to Support Growth. GameStop has many strengths and assets, including strong household brand recognition and a significant store network.
They have achieved their second objective and are well under way to achieve their third objective, which is to use the value of their brand to create more growth. The GameStop brand is a well known one and its recognition has increased with the January 2021 run-up in price. GameStop is a go-to location for games and entertainment products.
As with Chewy, Ryan Cohen and his investors know how to build a brand that competes with the biggest in the business. Cohen even said he knows how to excel in different categories.
“Frankly, I think, if you’re in the business of delighting your customers you could be very successful, and we would have been successful frankly in any category.”
Ryan Cohen
Source: Chewy founder Ryan Cohen on the company’s strong IPO (Chewy) https://youtu.be/Z31hgjEyVIc?si=KYRl0D741PURJAoF&t=275
Recently, GameStop launched their new product line called ‘CandyCon’, which display customizable controllers to be used for gaming purposes. They customizability includes picking your own template, trigger sticks, and buttons. They are GameStop exclusive, which adds to the brand image and becoming the omnichannel for retail excellence.
Whatever else GameStop has in store is something that will reveal itself in the future. With the burdens of losses, huge debt, and lacking management gone, GameStop is ready to run, not being held back by big inefficiencies and decay.
What do you think? What revenue streams could GameStop utilize in order to grow its business further?
9 responses
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Definitely! Although it doesn’t count as revenue, GameStop recently instated a commission that oversees the investments that can be done using that money. Ryan Cohen has received the title of ‘Chief Investment Officer’. GameStop might just be waiting for the perfect opportunity to put that money to work. Imagine the bargains when the market corrects and there are fire sales!
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It gives them quarantee that SHFs (Short Hedge Funds) can not drive their share price much lower.
Because the shorting of their shares has been rampant to the level where many people believe that the (already really high) public short interest is only “tip of the ice berg”, it is indeed possible that SHFs are in really hard position. If one checks the websites they often use for their paid “news” coverage, you can find hundreds of articles about “forget GameStop”.
So, the likelihood that there are still big SHFs trying to “short & distort” their operations is still quite high. Taking that into account it is a really good strategy to have some cash available, they could even now buy back big portion of their shares. But that would not make as much senses strategically as being able to do it, if the SHFs continue their rampant shorting.
It is hard to estimate how much Credit Suisse’s downfall was because of similar rampant decisions that “Big Money” doesn’t seem to get rid off. Now those bankers are trying to hide those decisions for 50 years.
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Are you aware of the movement by over 180,000 record holders/individual investors to Direct Register the entire float of GME? Many are using websites such as DRSGME.ORG and WhyDRS.ORG to educate the public and excise flaws inherent the market structure. They are 25% of the way there!
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I know about that, great reminder!
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These controllers feel quite nice! Pleasantly surprised. Really good price point for the quality.
They’re not at the level of a $200 controller, which makes sense, but historically, 3rd party controllers are a real hit and miss experience. Many of them have janky thumbsticks, short button press travels, usb connections that aren’t secure to the housing, or otherwise just seem as cheap as possible. That is not the case with these, which is a feat considering parts are interchangeable.
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That’s great! Seems you like you had a good experience with them. I especially like the colours, hope there will be even more in the future… and on more platforms!
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[…] which must be connected to this one. I do wonder who the owner is of the CandyCon trademark; the customizable controller products available exclusively at GameStop. Scratch that, a simple search reveals […]
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[…] Cohen and cos. efforts paid off: GameStop became profitable for the first time in years in 2023. Although revenue dropped, GameStop’s new focus, as described in their form 10-K, is to create new revenue streams. […]
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SandersonClay 
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