GameStop Corp. (NYSE:GME) jumped 7.5% in early trading on Wednesday after the retailer showed improvement with revenue, operating income, and EPS with its second-quarter earnings report.
The +20% revenue jump during the quarter was driven by strong collectibles business and Nintendo Switch 2 sales.
On Seeking Alpha, analyst Florian Muller said it is increasingly unclear what GameStop (NYSE:GME) plans to do with its huge pile of cash. The company has only funneled about 6% of it into Bitcoin.
Meanwhile, Investing Group Leader Julian Lin said GameStop (GME) is successfully pivoting to trading cards, a high-margin, secular growth business, with strong execution and growing collectibles revenue. Lin expects GME to continue to see margin improvement as it delves further into the trading card business.
Baird analyst Colin Sebastian was more cautious. “While we note clear product-related catalysts, we remain skeptical about GameStop’s ability to restore sustained Y/Y growth and positive core operating cash flow over the long haul,” he warned. GameStop (GME) has been thinly covered on Wall Street ever since the meme phenomenon of 2021 sent sell-side analysts scrambling.
Short interest on GME stands at 15.2%, which is still considered a high level, although nothing resembling the position ahead of the short trader massacre of 2021.
On a quantitative analysis basis, the Seeking Alpha quant score on GME is higher than the retail sector average.