A bad situation just got a whole lot worse today. GameStop has been struggling to make ends meet for quite some time. The company is bleeding money, and they’ve experienced an alarming turnover rate amongst the upper management. Just last month the once-popular retailer laid off over 100 employees, including Game Informer staff. The company just posted its financial results for the past quarter, and they paint a bleak picture. Revenue was down almost completely across the board, resulting in a net loss of $415 million over three months. Unsurprisingly, this has triggered yet another major stock crash.
GameStop stock crashes again
If you’ve been following the company’s financial situation, you know this isn’t the only big loss they’ve suffered recently. Back in June, GameStop saw its value drop by nearly 40% in one day. Today’s plunge isn’t quite that severe, but it’s still significant. At press time, the stock price is down 14.34% after hours. This is just the latest blow, as the company’s value has steadily spiraled downward since 2015.
Prior to this stock crash, GameStop’s value had been on a slight upward trajectory. This is partially due to Michael Burry, made famous by The Big Short, buying up 3% of the company’s shares. Burry bought the shares on the cheap, explaining that he believed the company could rebound. Whether or not that is true in the long run remains to be seen. In the short term, they are still bleeding money, and investors are growing nervous once again.
What comes next?
GameStop CEO George Sherman addressed the company’s plans for the future in the same press release. He announced plans for a strategy based on four tenants:
- Optimize the Core: Optimize the core business by improving efficiency and effectiveness across the organization, including cost restructuring, inventory management optimization, adding and growing high margin product categories, and rationalizing the global store base.
- Become the Social / Cultural Hub for Gaming: Create the social and cultural hub of gaming across the GameStop platform by testing and improving existing core assets including the store experience, knowledgeable associates and the PowerUp Rewards loyalty program.
- Build Digital Platform: Build compelling digital capabilities, including the recent relaunch of GameStop.com, to reach customers more broadly across the omni-channel platform and give them the full spectrum of content and access to products they desire.
- Transform Vendor Partnerships: Transform our vendor and partner relationships to unlock additional high-margin revenue streams and optimize the lifetime value of every customer.
Update: GameStop announced plans to close between 180 and 200 stores during today’s earnings call. This represents around 4% of the company’s total retail locations. “Underperforming” stores will be targeted for termination, and these closures will happen before the end of the year.