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Vivek Kumar
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GameStop

Gravity-defying GameStop, which has seen a stellar rise in its stock price of more than 2,640% in 2021, is not expected to report impressive results on Tuesday when it will announce both fourth quarter and fiscal 2020 earnings after the market closes.

The world’s largest multichannel video game retailer is expected to report its fourth-quarter earnings of $1.35 per share, which represents year-over-year growth of over 6% from $1.27 per share seen in the same quarter a year ago.

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The Grapevine, Texas-based company would post year-over-year revenue growth of about 1% year-on-year to $2.21 billion. In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 21%.

“Though the stock can defy all estimates and move in any direction, we don’t see a significant leg to this rally given the lack of fundamentals. Also, based on our machine learning analysis of trends in the stock price over the last few years, we believe that there is a strong chance of a decline in GME stock over the next month,” noted analysts at Trefis.

Of the five analysts who offered stock ratings for GameStop in the last three months, none gave “Buy”, three rated “Hold” and two rated “Sell”, according to Tipranks.

Bank of America in its latest research note said “We expect an underwhelming quarter given previously announced holiday sales results that were very disappointing.”

However, ZACKS Research, who gave a target price of $232 for 6-12 months and rated neutral, said the gaming giant has been actively involved in fast-tracking its digital transformation efforts and undertaking prudent business initiatives.

“Shares of GameStop have outpaced the industry in the past three months. Notably, the company’s shares got a boost recently after it announced the formation of a new strategic committee for accelerating transformation. The committee includes Ryan Cohen, who had been appointed to the company’s board earlier in January. The company had restructured its board to include three activist investors from RC Ventures. The move is expected to aid the company in boosting digital offerings,” noted analysts at ZACKS Research.

“Moving on, the company’s comparable-store sales (comps) numbers for the holiday season were encouraging. Markedly, strong e-commerce sales and sturdy demand for consoles aided holiday comps. Management continues to expect positive comps and profitability for the fourth quarter. However, store closures and supply chain constraints are likely to remain a drag.”

Check out FX Empire’s earnings calendar

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