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James Li
James Li
Articles (1494)  | Author's Website |

GameStop Blasts Off on Solid December Sales Performance

Company sets new 52-week high as board refreshments accelerate e-commerce growth

January 13, 2021 | About:

Shares of GameStop Inc. (NYSE:GME) set a new 52-week high on Wednesday on the heels of reporting triple-digit e-commerce sales growth during the nine-week period ending Jan. 2 and announcing board refreshments to accelerate the company's "pursuit of growth and market leadership."

On Monday, the Grapevine, Texas-based video game retailer said that holiday comparable sales increased 4.8% compared to the nine-week period ending Jan. 4, 2020, and 29.6% compared to the three-month period ending Oct. 31, 2020. E-commerce sales, which account for approximately 34% of the company's total sales, surged 309% compared to the prior-year holiday period.

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Company adds pet food co-founder to board of directors

The video game retailer announced this week that it entered into an agreement with RC Ventures LLC in which the company will appoint three new board of directors, including RC Ventures manager and Chewy Inc. (NYSE:CHWY) co-founder Ryan Cohen. GameStop Board Chairman Kathy Vrabeck said that the appointed directors bring "substantial e-commerce and technology expertise" to the company, advancing the potential for additional shareholder value.

GameStop CEO George Sherman said that he appreciates the "constructive dialog" he had with Cohen, ending with the agreement to install new board directors. Sherman added that the company is "leveraging its omnichannel capabilities" to serve its customers "wherever, whenever and however [the customers] choose to shop and experience gaming."

Alan Attal and Jim Grube, two other former officers at Chewy, join Cohen among a list of board directors that will stand for election on GameStop's nine-member board of directors at the company's June 2021 annual stockholder's meeting.

Stock hits new 52-week high

Shares of GameStop hit an intraday high of $38.65, a new 52-week high and up approximately 94% from the previous close of $19.93. The stock is now significantly overvalued based on a price-to-GF Value ratio of 3.16.

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GuruFocus ranks GameStop's financial strength 4 out of 10: Although the company's Beneish M-score of -4.11 suggests minimal earnings manipulation, GameStop has a moderately weak Altman Z-score of 2.37 and a debt-to-equity ratio that underperforms over 90% of global competitors.

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Gurus with holdings in GameStop include Lee Ainslie (Trades, Portfolio)'s Maverick Capital, Jim Simons (Trades, Portfolio)' Renaissance Technologies, Joel Greenblatt (Trades, Portfolio)'s Gotham Asset Management and Paul Tudor Jones (Trades, Portfolio)' Tudor Investment.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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